Investment and Credit Constraints in Transition Economies: Micro Evidence from Poland, the Czech Republic, Bulgaria and Romania

Jozef Konings (), Marian Rizov () and Hylke Vandenbussche ()

LICOS Discussion Papers from LICOS - Centre for Institutions and Economic Performance, K.U.Leuven

Abstract: In this paper we investigate to what extent firm investment in transition countries is sensitive to internal finance. We use accounts data of over 4000 companies in four countries at different stages of transition. We find that firms in Bulgaria and Romania are less sensitive to internal financing constraints, in contrast to firms in Poland and the Czech Republic. A likely explanation is that Bulgaria and Romania, which are the least advanced in the reforms towards market economy, have a stronger persistence of soft budget constraints than in the other two more advanced countries.

Keywords: Investment; financial constraints; soft budget constraint; transition to a market economy (search for similar items in EconPapers)
JEL-codes: E22 G32 P21 D21 D92 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-fin, nep-mac, nep-mfd and nep-tra
Date: 2002
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Persistent link: http://EconPapers.repec.org/RePEc:lic:licosd:11202

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