The soft budget constraint syndrome, first identified and studied by Janos Kornai, arises when a seemingly unprofitable enterprise is bailed out by the government or the enterprise's creditors. In other words, the enterprise is not held to a fixed budget, but finds its budget constraint...

This paper surveys the theoretical literature on the effect of soft budget constraints on economies in transition from centralization to capitalism; it also reviews our understanding of soft budget constraints in general. It focuses on the conception of the soft budget constraint syndrome as a...

We review theoretical work studying the effect of soft budget constraints (SBC) on economies in transition from centralization to capitalism. We also examine the connection of SBC to corporate finance, banking, and financial crises