Abstract：In the transitional economy, the behavior pattern of SOEs can be summarized as "compensating the whole cost", which lead to intensive inflation bias and sustained accumulation of financial risk. Tightening policy will restrain the behavior and bias,and render exposed loan of creditor banks. On the contrary,laissez faire attitude to inflation bias will not only mitigate financial difficulty of SOEs and banks,but also aggravate financial risk and inflation bias. Therefore, there is a vicious circle,which must be broken away from. The only way out is to recognize the behavior pattern of SOEs and its negative financial effects, and draw back the whole state-owned economy into efficacious scale.
