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Investment, Credit Rationing, and the Soft Budget Constraint: What Would a Well-Functioning Credit Market Look Like?

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Author Info

  • Jan Hanousek

    (CERGE-EI, Prague)

  • Randall K. Filer

    (CUNY)

Abstract

IV estimates of the link between profits and investment in the Czech Republic find a complex relationship. While firms may occasionally be credit rationed or face soft budget constraints, investments generally flow to industries with the greatest profit potential or need for recapitalization

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File URL: http://128.118.178.162/eps/mic/papers/0306/0306003.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Microeconomics with number 0306003.

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Length: 10 pages
Date of creation: 16 Jun 2003
Date of revision:
Handle: RePEc:wpa:wuwpmi:0306003

Note: Type of Document - pdf; prepared on IBM PC ; to print on HP/PostScript; pages: 10 ; figures: included
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Web page: http://128.118.178.162

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Keywords: Investment; Transition Economies; Soft budget constraint;

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References

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  1. Lubomír Lízal & Jan Svejnar, 2002. "Investment, Credit Rationing, And The Soft Budget Constraint: Evidence From Czech Panel Data," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 353-370, May.
  2. Joao F. Gomes, 2001. "Financing Investment," American Economic Review, American Economic Association, vol. 91(5), pages 1263-1285, December.
  3. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November.
  4. Steven Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1987. "Financing Constraints and Corporate Investment," NBER Working Papers 2387, National Bureau of Economic Research, Inc.
  5. Timothy Erickson & Toni M. Whited, 2000. "Measurement Error and the Relationship between Investment and q," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 1027-1057, October.
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Cited by:
  1. Fidrmuc, Jarko & Horváth, Roman & Horváthová, Eva, 2008. "Corporate Interest Rates and the Financial Accelerator in the Czech Republic," Discussion Papers in Economics 7191, University of Munich, Department of Economics.
  2. Roman Horváth, 2005. "Financial Accelerator Effects in the Balance Sheets of Czech Firms," Working Papers IES 96, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised 2005.
  3. Alexeev, Michael & Kim, Sunghwan, 2008. "The Korean financial crisis and the soft budget constraint," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 178-193, October.
  4. Zinych, Nataliya & Odening, Martin, 2009. "How Costly are (Agricultural) Investments during Economic Transition? A Critical Literature Appraisal," 2009 Conference, August 16-22, 2009, Beijing, China 50319, International Association of Agricultural Economists.

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