In advanced market economies, the use of trade credits is an important way of short-term financing and generally considered as being part of normal business practice. Some transition economies, however, have experienced a rapid accumulation of trade credits which have led to interlocking webs of...

Since Kornai (1980), the adverse effects of soft budget constraints have been well-documented in the literature. More recently, several theoretical explanations for the presence of soft budget constraints have been put forward. The purpose of this paper is to empirically test these theories on...