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 the 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 using instrumental variables or bivariate probit to unmask unmeasured selection effects.
Which Enterprises (Believe They) Have Soft Budgets? Evidence on the Effects of Ownership and Decentralization in MongoliaJames H. Anderson, Georges Korsun and Peter Murrell ,
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Journal of Comparative Economics
Which Enterprises (Believe They) Have Soft Budgets? Evidence on the Effects of Ownership and Decentralization in Mongolia