Tsuji, Kenji - In: International Advances in Economic Research 21 (2015) 1, pp. 33-40
<Para ID="Par1">This paper presents a model of soft budget constraints on firms where refinancing of poor projects is …’ budget constraints. A firm is said to have a soft budget constraint if a bank allows the firm to continue to operate even … when continuation is ex post inefficient. It is shown that bank capital regulation may induce soft budget constraints on …