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The Firm-Bank Interaction Regime and "Softness"

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  • Soldatos, Gerasimos T.

Abstract

This paper is analyzing a dynamic evolutionary game of firm-bank interaction to underline the importance of the interaction regime for encouraging or discouraging soft-budget phenomena and financial disorder. The poor performance of public sector's firms, which led globally to quests for the contraction of that sector and privatizations, is viewed as an equilibrium situation, ascribed to the inadequate attention of policy to the interaction regime. Moreover, it is found out that the background of the transition economies is such as to require even at equilibrium, a regime fostering much stricter financial discipline than in the mixed economies. Finally, it is argued that the abandonment of central planning was a necessary condition, a prerequisite, for the removal of its softness.

Suggested Citation

  • Soldatos, Gerasimos T., 2000. "The Firm-Bank Interaction Regime and "Softness"," MPRA Paper 58203, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:58203
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    References listed on IDEAS

    as
    1. Kornai, J, 1979. "Resource-Constrained versus Demand-Constrained Systems," Econometrica, Econometric Society, vol. 47(4), pages 801-819, July.
    2. János Kornai, 2014. "The soft budget constraint," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(supplemen), pages 25-79, November.
    3. Vega-Redondo, Fernando (ed.), 1996. "Evolution, Games, and Economic Behaviour," OUP Catalogue, Oxford University Press, number 9780198774723.
    4. Kornai, Janos, 1992. "The Socialist System: The Political Economy of Communism," OUP Catalogue, Oxford University Press, number 9780198287766.
    5. Gale, John & Binmore, Kenneth G. & Samuelson, Larry, 1995. "Learning to be imperfect: The ultimatum game," Games and Economic Behavior, Elsevier, vol. 8(1), pages 56-90.
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    More about this item

    Keywords

    Soft-budget; evolutionary games; transition economies;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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