We demonstrate that the co-existence of different motives for liquidity preferences profoundly affects the efficiency of financial intermediation. Liquidity preferences arise because consumers wish to take precautions against sudden and unforeseen expenditure needs, and because investors want to...

Strategic investors, such as corporate venture capitalists, engage in the financing of start-up firms to complement their core businesses and to facilitate the internalization of externalities. We argue that while strategic objectives make it more worthwhile for an investor to elicit high...

This paper revisits the widely known and used concept of soft budget constraints in party-states introduced by Kornai (1980), from the point of view of a comparative analytical model (Csanádi, 2003). It embeds budget constraints in the structure of power relations described by the model as the...