Soft budget constraint and the optimal choices of research and development projects financing

Article Abstract:

Analysis of soft budget constraint impact on optimal research and development financing reveals that large companies tend to focus more on safer innovative projects that new product development and this could explain why smaller firms tend to advance more than larger companies. Smaller firms tend to get ahead of larger competitors as smaller firms tend to focus in the development of new products because of an effective ex-post screening mechanism that larger corporations lack.

Finance, Technological innovations

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Soft budget constraints and banking in transition economies

Article Abstract:

Analysis of soft budget constraint models of firms financed by banks in transition economies reveals that all models share the same sequential structure due to endogenous lack of credibility in liquidating a project instead of refinancing it. The study also reveals that they also share the property that refinancing is optimal ex post for the decision maker that hard budget constraint mechanism requires endogenous restoration of credibility for liquidation.

Research, Reports, Economic research

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The place of the soft budget constraint syndrome in economic theory

Article Abstract:

Analysis of soft budget constraint (SBC) theory reveals that SBC can emerge in nonregulated spheres specially in vertical relationships rather than horizontal spheres. SBC was only recently applied to firms for socialist economies specially when seeking to explain theories of exit from a market. SBC is also used to explain the theory of regulation but this is not special case as not all price regulations result in SBC.

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