Which Enterprises (Believe They) Have Soft Budgets? Evidence on the Effects of Ownership and Decentralization in Mongolia

James Anderson, Georges Korsun (gkorsun@chemonics.com) and Peter Murrell
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Georges Korsun: Chemonics International

Electronic Working Papers from University of Maryland, Department of Economics

Abstract: To ascertain the prevalence of soft budgets and to find causes of softness, we surveyed Mongolian enterprises, asking whether state aid was expected when financial difficulties arose. One-quarter of enterprises expected soft-budgets, a large proportion of which have central government ownership. We examine causes of soft budgets in addition to state ownership, but the central government variable dominates. These results are confirmed when using instrumental variables or bivariate probit to unmask unmeasured selection effects. Local government ownership has a much weaker effect than does central ownership, suggesting the crucial role of decentralization.

Keywords: Soft Budgets; Privatization; Local Government; Mongolia; Transition (search for similar items in EconPapers)
JEL-codes: H20 H70 O53 P11 P21 (search for similar items in EconPapers)
Pages: 39 pages
Date: 1998-10
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Citations: View citations in EconPapers (7)

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Journal Article: Which Enterprises (Believe They) Have Soft Budgets? Evidence on the Effects of Ownership and Decentralization in Mongolia (2000)
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