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| Author: | Colombo, E. Stanca, L. |
| Title: | Investment decisions and the soft budget constraint. Evidence from a large panel of Hungarian firms |
| Journal: | Economics of transition
2006 : VOL. 14:1, p. 171-198 |
| Index terms: | investments budgeting decision making companies transition economies Hungary Central Europe Eastern Europe |
| Language: | eng |
| Abstract: | This paper investigates the investment (here as: inv.) behaviour of a large panel of Hungarian firms in the period 1989-99 to assess the impact of institutional and regulatory changes on the efficiency of credit allocation. It is found that the role of financial (here as: fnc.) factors for inv. decisions has changed significantly after the introduction of major fnc. reforms, firms being affected differently depending on their ownership type. Reforms have hardened the budget constraint (as: bdg-c.) of private domestic firms, particularly small ones, reducing informational problems for foreign-owned firms. State-owned firms (as: s-firms) remained subject to a soft bdg-c. Particularly small s-firms became more sensitive to fnc. conditions, whereas large s-firms were unaffected, operating under a soft bdg-c. |
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