Abstract

http://ssrn.com/abstract=285369
 
 

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Investment, Credit Rationing, and the Soft Budget Constraint: Evidence from Czech Panel Data


Jan Svejnar


School of International and Public Affairs, Columbia University, NY, USA; CEPR; IZA; CERGE-EI; University of Ljubljana

Lubomir Lizal


Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute); Czech National Bank (CNB)


Review of Economics and Statistics, Vol. 84, No. 2, May 2002, pp. 353-370

Abstract:     
Strategic restructuring of firms through investment is key to a transition from plan to market. Using data on industrial firms in the Czech Republic during 1992-98, we find that (a) foreign owned companies invest the most and cooperatives the least, (b) private firms do not invest more than state-owned ones and (c) cooperatives and small firms are credit rationed. Given the large volume of non-performing bank loans to firms and the high rate of investment of large state owned and private firms, our findings also suggest that these firms operate under a soft budget constraint. Estimates of a dynamic model, together with the support for the neoclassical model, suggest that firms started to behave consistently with profit-maximization.

Keywords: investment, restructuring, credit rationing, soft budget constraint, ownership, legal status, transition to a market economy

JEL Classification: E22, G32, P21, D21, D92

Accepted Paper Series


Not Available For Download

Date posted: October 4, 2001  

Suggested Citation

Svejnar, Jan and Lizal, Lubomir, Investment, Credit Rationing, and the Soft Budget Constraint: Evidence from Czech Panel Data. Review of Economics and Statistics, Vol. 84, No. 2, May 2002, pp. 353-370. Available at SSRN: http://ssrn.com/abstract=285369

Contact Information

Jan Svejnar (Contact Author)
School of International and Public Affairs, Columbia University, NY, USA ( email )
420 West 118th Street
New York, NY 10027
United States
CEPR
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
IZA
P.O. Box 7240
Bonn, D-53072
Germany
CERGE-EI
P.O. Box 882
7 Politickych veznu
111 21 Prague 1, Prague
Czech Republic
HOME PAGE: http://www.cerge-ei.cz
University of Ljubljana ( email )
Dunajska 104
Ljubljana, 1000
Slovenia
Lubomir Lizal
Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )
P.O. Box 882
7 Politickych veznu
Prague 1, 111 21
Czech Republic
+420 2 2400 5114 (Phone)
+420 2 2422 7143 (Fax)
HOME PAGE: http://www.cerge-ei.cz
Czech National Bank (CNB) ( email )
Na Prikope 28
CZ-11503 Praha 1
Czech Republic
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