Research On Soft Budget Constraint:Mechanism,Measurement And Impact On Capital Structure

The theory of soft budget constraint was initially used to study the phenomenon of socialist countries’ continuous aid for deficit companies,especially for state-owned enterprises.For the transition economies,the soft budget constraint presents some unique features,and may also be the norm in financial systems.The theory of soft budget constraint has gradually developed into one of the leading theories in modern economics.Basing on the Chinese realistic system,this article combines the theory of soft budget constraint with the theory of game theory and the theory of capital structure to analyze the mechanism,measurement and influence on the capital structure of China’s soft budget constraints.The main research contents include:First,introduce the relevant theory.This section introduces the theory of the soft budget constraint theory and capital structure theory,all this provides a support for the follow-up studies.Second,the background and mechanism of soft budget constraint.This section analyzes the particularity of the soft budget constraints of enterprises.By comparing with the other transitional countries and United States,it is found that the soft budget constraints in China are more embodied as a "recessive" arrangement.Soft budget constraint is a kind of "government-enterprise collusion" behavior with the characteristics of cooperation.Based on the bargaining model of transferable utility,we analyze the cross-office-holding situation between managers of state-owned enterprises and government officials.Cross-office-holding will change the expected utility of both sides,and then change the decision-making and behavior of both sides.In the framework of evolutionary game theory,we make a game analysis of the behavior between the state-owned enterprises and the government,and carry out numerical simulation.Third,this paper studies the measurement of soft budget constraint.This section analyses the expression of soft budget constraints,and then,based on the review of other measures,overinvestment is an appropriate indicator of soft budget constraints.The analysis shows that the impact of soft budget constraint on the output of stateowned enterprises,state-owned enterprises often have excess capacity,and the higher the degree of soft budget constraint,the more serious the excess capacity will be.Fourth,this paper studies the impact of soft budget constraint on corporate capital structure..This paper analyzes the impact of soft budget constraint on the capital structure of state-owned enterprises and private enterprises,and makes a deep and multi-angle comparison.Then this paper studies the relationship between political connections,financing activities and capital structure of private enterprises under soft budget constraints.The empirical results show that private enterprises are more likely to make bank credit loans if their owners have political connections.Finally,the paper analyzes the relationship between the soft budget constraint of Banks and the capital structure of enterprises,and makes an empirical analysis from the perspective of commercial Banks,which is the support of the soft budget constraint,and finds that the soft budget constraint of Banks has an impact on the capital structure of both stateowned enterprises and private enterprises.