The paper focuses on specific interference by government in the banking and corporate sectors during transition in the Czech Republic. The paper argues that the influence of the government in the Czech economy was higher than what the government officially conceded during the 1990s. The...

This paper investigates how the possibility of government subsidies to firms affects lending and managerial incentives. We develop a model that shows that government support can perform as implicit insurer of firms, which leads to two main effects: lowering incen-tives of managers and increase...

A conceptual framework for analyzing credit rationing and the link between credit access and profitability is developed. The empirical analysis using data from manufacturing firms in Bulgaria, an economy with dramatically changing credit constraints during transition, provides direct estimates...

In a monetary union, macroeconomic policies are strongly associated with externalities that imply the need for coordination. However, if coordination is not complete, it might be unable to cope with the externalities. This paper investigates different solutions for internalizing policy...

The paper surveys the role of financial markets and fiscal institutions in the transformation process going on in Eastern and Central Europe. It highlights (a) the need to create some sort of “social ecological balance” necessary for the working of a modern market economy; (b) the need to...

Chinese collective and state-owned enterprises have tended to over-compensate their employees. Using payments in kind as an example, this paper examines why and how firms engage in such 'irrational' behavior. In-kind payments (payments made in terms of consumer goods) used to be an important...