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<P>A dynamic model of soft budget-constraint </P></H2><STRONG>
<P>Zhihui Gu and Shiyun Zhang<BR><BR><SUP>a</SUP>Department of Corporate Finance, Business School of Nankai University, Tianjin 300071, PR China<BR><SUP>b</SUP>The Research Center of Corporate Governance, Nankai University, Tianjin 300071, PR China <BR><BR>Received 8 October 2005;  revised 16 February 2006;  accepted 23 February 2006.  Available online 17 August 2006. <BR><BR><BR></P></STRONG><BR><BR><SUP>a</SUP>Department of Corporate Finance, Business School of Nankai University, Tianjin 300071, PR China<BR><SUP>b</SUP>The Research Center of Corporate Governance, Nankai University, Tianjin 300071, PR China <BR><BR>Received 8 October 2005;  revised 16 February 2006;  accepted 23 February 2006.  Available online 17 August 2006. <BR><BR><BR>
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<H2>Abstract</H2>
<P>We study the soft budget-constraint by dynamic models and conclude that the soft budget-constraint originated in the investment activities do not match the profit function, and policy burdens will intensify the soft budget-constraint. </P>
<P><STRONG>Keywords: </STRONG>Soft budget-constraint; Policy burdens; Dynamic model </P>
<P><STRONG>JEL classification codes: </STRONG>H77; P52; C61 </P></DIV> <BR>