Which Enterprises (Believe They) Have Soft Budgets? Evidence on the Effects of Ownership and Decentralization in Mongolia
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.
|Date of creation:||Oct 1998|
|Contact details of provider:|| Postal: Department of Economics, University of Maryland, Tydings Hall, College Park, MD 20742|
Web page: http://www.econ.umd.edu/
|Order Information:|| Postal: Department of Economics, University of Maryland, Tydings Hall, College Park, MD 20742|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- J. Earle & S. Estrin & L. Leshchenko, 1996. "Ownership structures, patterns of control and enterprise behavior in Russia," LSE Research Online Documents on Economics 20642, London School of Economics and Political Science, LSE Library.
- Qimiao Fan & Mark E. Schaffer, 1994. "Government financial transfers and enterprise adjustments in Russia, with comparisons to Central and Eastern Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(2), pages 151-188, 06.
- K. Newey, Whitney, 1985. "Generalized method of moments specification testing," Journal of Econometrics, Elsevier, vol. 29(3), pages 229-256, September.
- Brian Pinto & Marek Belka & Stefan Krajewski, 1993. "Transforming State Enterprises in Poland: Evidence on Adjustment by Manufacturing Firms," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(1), pages 213-270.
- Li, David D., 1998. "Insider control and the soft budget constraint: a simple theory," Economics Letters, Elsevier, vol. 61(3), pages 307-311, December.
- Kornai, Janos, 1993. "The Evolution of Financial Discipline under the Postsocialist System," Kyklos, Wiley Blackwell, vol. 46(3), pages 315-336.