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Essays on ownership and soft budget constraint.
Evidence from transition countries

Abstract : This thesis contributes to the literature on ownership and soft budget constraint (SBC). The first chapter reviews the formal literatures on soft budget constraint and privatization. The second chapter is an empirical work that studies whether privatization has an impact on macroeconomic performance in transition economies. We find that privatization has a positive impact on output level if and only if the dominant method of privatization is gradual sales. The third chapter is an original microeconometric work that studies which firms have a SBC. We use subjective data that elicits expectations of obtaining an extension of a loan in case of financial troubles. We find that managers' expectations are higher when the initial financing requires collateral, and higher for larger firms and when firms are owned by employees and managers. We also provide evidence that managers' expectations influence their price responsiveness. The fourth chapter proposes a SBC theoretical model that explains why, in ex-USSR, unprofitable firms are more likely to obtain loans than other firms despite the fact that there are numerous private banks. Assuming that firms with SBC are rescued by subsidies from the government obtained by the taxation of good projects, such an equilibrium is possible. Taxation on good projects of firms with a hard budget constraint has a desincitative effect, diminishing the probability to obtain loans. We find empirical evidence that is consistent with our model's predictions.
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Submitted on : Wednesday, January 30, 2008 - 3:17:35 PM
Last modification on : Tuesday, January 19, 2021 - 11:08:27 AM
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  • HAL Id : tel-00226361, version 1



Fabian Gouret. Essays on ownership and soft budget constraint.
Evidence from transition countries. Economics and Finance. Université Panthéon-Sorbonne - Paris I, 2007. English. ⟨tel-00226361⟩



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