Financing Late Industrialization: Evidence from the State Bank of the Russian Empire

Gerschenkron (1962) argued that public institutions such
as the State Bank of the Russian Empire spurred the country’s industrialization.
We test this assertion by exploiting plant-level variation in access to State
Bank branches using a unique geocoded factory data set. Employing an
identification strategy based on geographical distances between banks and
factories, our results show improved access to public banking encouraged faster
growth in factory-level revenue, mechanization, and labor productivity. In line
with theories of late industrialization, we also find evidence that public
credit mattered more in regions where commercial banks were fewer and markets
were smaller.