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Understanding the Soft Budget Constraint

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  • J. KORNAI
  • E. MASKIN
  • G. ROLAND.

Abstract

(The Ending) The phenomenon of the soft budget constraint (SBC) in a competitive environment is analyzed in the second part of the article. Its consequences for banks and the role played in developing financial crises are considered. Political intervention in firms is studied. The conclusion is made that the SBC syndrome can arise in any economic system.

Suggested Citation

  • J. Kornai & E. Maskin & G. Roland., 2004. "Understanding the Soft Budget Constraint," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 12.
    • Handle: RePEc:nos:voprec:2004-12-3
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