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Article: Soft budget constraint theories: From centralization to the market

TitleSoft budget constraint theories: From centralization to the market
Authors
KeywordsBanking and finance
Centralized economy
Renegotiation
Soft budget constraint
Theory of the firm
Transition
Issue Date2001
PublisherBlackwell Publishing Ltd. The Journal's web site is located at http://www.blackwellpublishing.com/journals/ECOT
Citation
Economics Of Transition, 2001, v. 9 n. 1, p. 1-27 How to Cite?
AbstractThis paper surveys the theoretical literature on the effect of soft budget constraints on economies in transition from centralization to capitalism; it also reviews our understanding of soft budget constraints in general. It focuses on the conception of the soft budget constraint syndrome as a commitment problem. We show that the two features of soft budget constraints in centralized economies - ex post renegotiation of firms' financial plans and a close administrative relationship between firms and the centre - are intrinsically related. We examine a series of theories (based on the commitment-problem approach) that explain shortage, lack of innovation in centralized economies, devolution, and banking reform in transition economies. Moreover, we argue that soft budget constraints also have an influence on major issues in economics, such as the determination of the boundaries and capital structure of a firm. Finally, we show that soft budget constraints theory sheds light on financial crises and economic growth. © The European Bank for Reconstruction and Development, 2001.
Persistent Identifierhttp://hdl.handle.net/10722/138701
ISSN
2015 Impact Factor: 0.66
2015 SCImago Journal Rankings: 0.388
SSRN
References

 

DC FieldValueLanguage
dc.contributor.authorMaskin, Een_HK
dc.contributor.authorXu, Cen_HK
dc.date.accessioned2011-09-08T08:13:04Z-
dc.date.available2011-09-08T08:13:04Z-
dc.date.issued2001en_HK
dc.identifier.citationEconomics Of Transition, 2001, v. 9 n. 1, p. 1-27en_HK
dc.identifier.issn0967-0750en_HK
dc.identifier.urihttp://hdl.handle.net/10722/138701-
dc.description.abstractThis paper surveys the theoretical literature on the effect of soft budget constraints on economies in transition from centralization to capitalism; it also reviews our understanding of soft budget constraints in general. It focuses on the conception of the soft budget constraint syndrome as a commitment problem. We show that the two features of soft budget constraints in centralized economies - ex post renegotiation of firms' financial plans and a close administrative relationship between firms and the centre - are intrinsically related. We examine a series of theories (based on the commitment-problem approach) that explain shortage, lack of innovation in centralized economies, devolution, and banking reform in transition economies. Moreover, we argue that soft budget constraints also have an influence on major issues in economics, such as the determination of the boundaries and capital structure of a firm. Finally, we show that soft budget constraints theory sheds light on financial crises and economic growth. © The European Bank for Reconstruction and Development, 2001.en_HK
dc.languageengen_US
dc.publisherBlackwell Publishing Ltd. The Journal's web site is located at http://www.blackwellpublishing.com/journals/ECOTen_HK
dc.relation.ispartofEconomics of Transitionen_HK
dc.rightsThe definitive version is available at www.blackwell-synergy.com-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subjectBanking and financeen_HK
dc.subjectCentralized economyen_HK
dc.subjectRenegotiationen_HK
dc.subjectSoft budget constrainten_HK
dc.subjectTheory of the firmen_HK
dc.subjectTransitionen_HK
dc.titleSoft budget constraint theories: From centralization to the marketen_HK
dc.typeArticleen_HK
dc.identifier.emailXu, C: cgxu@hku.hken_HK
dc.identifier.authorityXu, C=rp01118en_HK
dc.description.naturepreprint-
dc.identifier.scopuseid_2-s2.0-0035060438en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-0035060438&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume9en_HK
dc.identifier.issue1en_HK
dc.identifier.spage1en_HK
dc.identifier.epage27en_HK
dc.publisher.placeUnited Kingdomen_HK
dc.identifier.ssrn264851-
dc.identifier.scopusauthoridMaskin, E=6602103851en_HK
dc.identifier.scopusauthoridXu, C=23020300700en_HK

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