Gail Buyske has written an informative, well-referenced and passionate book about small business and microfinancing in postcommunist Russia. It addresses three major themes: the development of microfinance in the global and historical context and how it applies to Russia; the emergence of small entrepreneurs; and Russia's banking sector in the context of the collapse of the USSR economy and the creation of an effective banking system. These three themes intersect in the last chapter of the book with a discussion of KMB Bank (where Buyske has served as chairman of the board), whose experience illustrates the evolution of finance for Russian entrepreneurs while providing more global lessons and implications for the future of microfinance.

Chapter 1 centers on evolution, methodology, and the current picture of microfinance worldwide. The author explores major roots and trends, providing examples and comparisons of best practices in microfinance around the world. In her passionate advocacy for microfinancing, Buyske draws a boundary between microfinancing and small business financing, rightfully arguing that the former in developing countries has typically been seen as a noncommercial, poverty-alleviating product, while the latter is clearly a commercial product (pp. 39, 44–45). According to the author, the poverty label attached to microfinance has contributed to the failure of many policymakers to recognize the role that microfinance and—put broadly—small business finance could play in financial sector development (p. 46). Although microfinance has made enormous contributions to economic development over the past several decades, its ability to continue to do so requires new commercial partners to bring new financial resources and expertise, as well as a relaxation of the conceptual boundaries between microfinance and small business finance (p. 47). There is one important consideration, however: Although in the 1990s Russia could have been regarded as a developing economy, drawing direct parallels and policy implications by using examples of other developing nations may be misleading. For example, some estimates suggest that in 2007, Russia's GDP per capita in purchasing-power parity terms was significantly higher—$14,600 in U.S. dollars, compared to $2,700 in India (CIA World Factbook, 2008; https://http://www.cia.gov/library/publications/the-world-factbook/).

Chapter 2 provides an array of factual information and an interesting picture of the post-Soviet transition of small business and entrepreneurship through the prism of microfinance. From starting conditions, through the years of Gorbachev's “perestroika” (1985–90), to the initial consolidation in small business and entrepreneurship in the 1990s, the 1998 financial crisis, and the mainstream developments, Buyske traces these dynamics using diverse sources. She argues that as the history of Russian entrepreneurship is very short and legal entrepreneurship came into being as the Soviet Union was collapsing, new Russian entrepreneurs had to cope with incredible social, economic, and political upheavals in the country. Hence, the relatively slow developments in small business and microfinance systems and a social stigma on entrepreneurs. She makes an argument that Russian entrepreneurs are in an ongoing process of development but that they have not maximized their growth potential. What is unusual about Russian entrepreneurs is that they have survived and grown since the early days of perestroika, despite impediments that are almost unimaginable (p. 100).

Drawing on several recent large-scale Western-sponsored studies of Russia's small business and entrepreneurship, Buyske makes a broad argument that contrary to popular belief, Russia's small- and medium-size enterprise sector does not lag far behind of that in the European Union or other developed countries (pp. 97, 99). It should be pointed out, however, that some recent data challenge this assumption. For example, the latest 2007 Global Entrepreneurship Monitor (GEM) survey of 42 countries placed Russia among the world's least entrepreneurial countries across the group of its reference middle- to low-income countries in Europe and Asia, as a percentage of population, ages 18–64. The lag would be even bigger if compared with major developed economies (N. Bosma, K. Jones, E. Autio and J. Levie, “Global Entrepreneurship Monitor: Executive Report 2007,” in Global Entrepreneurship Monitor, 2007). By providing additional supporting information comparing Russia with other countries in this context, the author could have enhanced his argument.

Chapter 3 explores the structure and role of Russian financial institutions, including the Central Bank, commercial banks, and other entities in the micro and small business finance context. In contrast to the early days of the Russian market transformation, argues Buyske, in the mid-2000s banks aggressively seek opportunities in small business sector financing—that barely existed a decade ago during the perestroika era. The author makes a point that this historical disinterest in lending to Russian medium- and small-size enterprises (MSE) has less to do with these enterprises themselves that with the availability of other opportunities. Although MSE lending levels in Russia are currently low, they appear to be at the beginning of an upward trend with a looming threat by the major oligopolistic government-controlled banks, Sberbank and Vneshtorgbank: Their market power can prevent Russia's banking sector from reaching its full competitive potential (p. 158).

Chapter 4 tells a story of a financial institution that intersects with the book's three themes of microfinance, the emergence of Russian entrepreneurs, and banking sector development. The early chaos of Russia's banking sector has never actually prevented Russian banks from lending in microfinance; instead, it has created incentives that made other activities more attractive (p. 161). The chapter traces the establishment of KMB, key stages of its organizational development, and strategic growth and performance in Russia, as well as its role in facilitating small and micro businesses through financing. Although every problem or challenge is in its details, many of KMB's challenges more generally are characteristic of those facing small business and microfinance lenders founded by donors and socially committed investors: managing growth, ensuring sound corporate governance, operating in the vicissitudes of a developing economy, finding the balance between profitability and mission, and ensuring the continuation of the microfinance lending after the exit of the original founders. (KMB was founded in 1999 by the European Bank for Reconstruction and Development [EBRD] to lend to micro- and small entrepreneurs. After several stages in its organization and strategic development, KMB was acquired in 2005 by Bank Intesa, a commercial banking institution based in Italy.)

Arguably, this is the most unique and interesting section of the book, where Buyske shares her rich first-hand experience in starting up and growing a financial institution in the Russian emerging market economy. She gives a detailed account of initial challenges in the creation of KMB (pp. 169–71), operating in Russia's turbulent banking environment (pp. 175–77), developing the bank's competitive edge, and eventually turning it to profitability (pp. 181–86).

Banking on Small Business is interesting and instructive reading that can be highly recommended to those studying political-economic issues, banking, and entrepreneurship in emerging markets. It may be particularly engaging for business practitioners and entrepreneurs contemplating Russian expansion.