Leasing in Russia: A Case Study

As Russia goes through the process of converting from a command to a market economy, many old business processes and standards had to be terminated and new methods implemented. Leasing is an example of a technique long in use in more developed economies that has been transplanted to Russia, with changes made to reflect the particular circumstances there. This paper examines the current state of leasing in Russia by concentrating on the experiences of one leasing company: Volgopromleasing. Interest rates and inflation rates that fluctuate widely and are sometimes extremely high, as well as a legislative environment that may be expected to change are some of the challenges faced by the firm. However, compensating opportunities exist: many Russian firms desperately need to update their equipment, the government is strongly interested in promoting rapid economic growth, and the legislation currently in effect favors leasing over other methods of acquiring fixed assets. Although leasing has the potential to assist Russian firms in modernizing and growing, and, therefore, to help the Russian economy in its effort to rapidly move to a new market economy, this can only occur in conjunction with other economic initiatives that also provide for growth and stabilization.