EconPapers    
Economics at your fingertips  
 

Investment decisions and the soft budget constraint: evidence from Hungarian manufacturing firms

Emilio Colombo () and Luca Stanca ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the investment behaviour of a large panel of Hungarian firms in the period 1989–99, in order to assess the impact of institutional and regulatory changes on the efficiency of credit allocation. We find that the role of financial factors for investment decisions has changed significantly after the introduction of major financial reforms, and that firms were affected differently depending on their ownership type. Reforms have hardened the budget constraint of private domestic firms, particularly small ones, and reduced informational problems for foreign-owned firms. State-owned firms remained subject to a soft budget constraint. In particular, small state firms became more sensitive to financial conditions, whereas large state firms were unaffected and kept operating under a soft budget constraint.

Keywords: Investment; financial constraints; soft budget constraint; transition (search for similar items in EconPapers)
JEL-codes: G31 P31 (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Published in The Economics of Transition 14.1(2006): pp. 171-198

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/18708/1/MPRA_paper_18708.pdf original version (application/pdf)

Related works:
Working Paper: Investment Decisions and the Soft Budget Constraint: Evidence from Hungarian Manufacturing Firms (2003) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:18708

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().

 
Page updated 2019-10-05
Handle: RePEc:pra:mprapa:18708