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[Institutional Causality of Soft Budget Constraints in Chinese Higher Education Sector and its Implications for Governance]

  • Huang, Weiting
  • Pang, Xiaobo

A wide range of financial distress has emerged in Chinese higher education sector, and this paper aims to explain it. We pointed out that soft budget constraint is the root cause of the financial distress; our main tasks are to identify the institutional causality of soft budget constraint and its applications for governance. We concluded three institutional causalities: quasi-public goods nature of higher educational serves; affiliated relationship between government and colleges; misaligned of the objection-incentive arrangement for college chairman. Based on the above three points, we provided some solutions to hardening the budget constraints.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 11500.

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Date of creation: Sep 2008
Date of revision:
Handle: RePEc:pra:mprapa:11500
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  1. Janos Kornai & Eric Maskin & Gerard Roland, 2002. "Understanding the Soft Budget Constraint," Economics Working Papers 0019, Institute for Advanced Study, School of Social Science.
  2. Milton Friedman, 1997. "Public Schools: Make Them Private," Education Economics, Taylor & Francis Journals, vol. 5(3), pages 341-344.
  3. Kornai, Janos, 1998. "The Concept of the Soft Budget Constraint Syndrome in Economic Theory," Journal of Comparative Economics, Elsevier, vol. 26(1), pages 11-17, March.
  4. Nicholas Barr, 2003. "Financing higher education: lessons from the UK debate," LSE Research Online Documents on Economics 287, London School of Economics and Political Science, LSE Library.
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