IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/6101.html
   My bibliography  Save this paper

Overdraft facility policy and firm performance : an empirical analysis in eastern European Union industrial firms

Author

Listed:
  • Castillo, Leopoldo Laborda
  • Guasch, Jose Luis

Abstract

This article evaluates the effect of the overdraft facility (or line of credit) policy by comparing a large sample of overdraft facilitated firms and matched non-overdraft facilitated firms from Eastern Europe at the sector level. The sample firms are compared with respect to rates of different performance indicators including: technical efficiency (a Data Envelopment Analysis approach is applied to estimate the technical efficiency level for individual sectors), production workers trained, expenditures on research and development, and export activity. In order to avoid the selectivity problem, propensity score matching methodologies are adopted. The results suggest that a certain level of overdraft facility provided to firms would be needed to stimulate investment in research and development, which will eventually result in increased growth in productivity.

Suggested Citation

  • Castillo, Leopoldo Laborda & Guasch, Jose Luis, 2012. "Overdraft facility policy and firm performance : an empirical analysis in eastern European Union industrial firms," Policy Research Working Paper Series 6101, The World Bank.
    • Handle: RePEc:wbk:wbrwps:6101
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2012/06/20/000158349_20120620090557/Rendered/PDF/WPS6101.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Leopold Simar & Paul Wilson, 2000. "A general methodology for bootstrapping in non-parametric frontier models," Journal of Applied Statistics, Taylor & Francis Journals, vol. 27(6), pages 779-802.
    2. Gatti, Roberta & Love, Inessa, 2006. "Does access to credit improve productivity ? Evidence from Bulgarian firms," Policy Research Working Paper Series 3921, The World Bank.
    3. Lola Esteban Álvarez & J. Luis Gallizo Larraz & J. Mª Hernández García, 2002. "Eficiencia técnica y convergencia en la industria manufacturera de la Unión Europea," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 20, pages 381-401, Agosto.
    4. Inha Oh & Jeong-Dong Lee & Almas Heshmati & Gyoung-Gyu Choi, 2009. "Evaluation of credit guarantee policy using propensity score matching," Small Business Economics, Springer, vol. 33(3), pages 335-351, October.
    5. Lööf, Hans & Heshmati, Almas, 2004. "The Impact of Public Funding on Private R&D investment: New Evidence from a Firm Level Innovation Study," Working Paper Series in Economics and Institutions of Innovation 6, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies, revised 01 Mar 2005.
    6. Clarke, George R.G. & Cull, Robert & Kisunko, Gregory, 2012. "External finance and firm survival in the aftermath of the crisis: Evidence from Eastern Europe and Central Asia," Journal of Comparative Economics, Elsevier, vol. 40(3), pages 372-392.
    7. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    8. Cowling, Marc & Mitchell, Peter, 1997. "The Evolution of U.K. Self-Employment: A Study of Government Policy and the Role of the Macroeconomy," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(4), pages 427-442, September.
    9. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters, in: New Developments in Productivity Analysis, pages 303-372, National Bureau of Economic Research, Inc.
    10. Minjia Chen & Alessandra Guariglia, 2011. "Financial constraints and firm productivity in China: do liquidity and export behavior make a difference?," Discussion Papers 11/09, University of Nottingham, GEP.
    11. Adam B. Jaffe, 2002. "Building Programme Evaluation into the Design of Public Research-Support Programmes," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 18(1), pages 22-34, Spring.
    12. Léopold Simar & Paul W. Wilson, 1998. "Sensitivity Analysis of Efficiency Scores: How to Bootstrap in Nonparametric Frontier Models," Management Science, INFORMS, vol. 44(1), pages 49-61, January.
    13. Richard Blundell & Monica Costa Dias, 2000. "Evaluation methods for non-experimental data," Fiscal Studies, Institute for Fiscal Studies, vol. 21(4), pages 427-468, January.
    14. International Monetary Fund, 2005. "United Kingdom: 2004 Article IV Consultation-Staff Report; Staff Statement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the United Kingdom," IMF Staff Country Reports 2005/080, International Monetary Fund.
    15. Butler, Alexander W. & Cornaggia, Jess, 2011. "Does access to external finance improve productivity? Evidence from a natural experiment," Journal of Financial Economics, Elsevier, vol. 99(1), pages 184-203, January.
    16. Heshmati, Almas & Loof, Hans, 2005. "The Impact of Public Funds on Private R&D Investment: New Evidence from a Firm Level Innovation Study," Discussion Papers 11862, MTT Agrifood Research Finland.
    17. Yasar, Mahmut & Rejesus, Roderick M., 2005. "Exporting status and firm performance: Evidence from a matched sample," Economics Letters, Elsevier, vol. 88(3), pages 397-402, September.
    18. International Monetary Fund, 2005. "United Arab Emirates: 2005 Article IV Consultation—Staff Report; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the United Arab Emirates," IMF Staff Country Reports 2005/269, International Monetary Fund.
    19. Marco Caliendo, 2006. "Microeconometric Evaluation of Labour Market Policies," Lecture Notes in Economics and Mathematical Systems, Springer, number 978-3-540-28708-7, December.
    20. Josh Lerner, 2002. "When Bureaucrats Meet Entrepreneurs: The Design of Effective "Public Venture Capital" Programmes," Economic Journal, Royal Economic Society, vol. 112(477), pages 73-84, February.
    21. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
    22. W W Cooper & K S Park & G Yu, 2001. "IDEA (Imprecise Data Envelopment Analysis) with CMDs (Column Maximum Decision Making Units)," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 52(2), pages 176-181, February.
    23. Roberta Gatti & Inessa Love, 2008. "Does access to credit improve productivity? Evidence from Bulgaria1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(3), pages 445-465, July.
    24. Brunetti, Aymo, 1997. "Political Variables in Cross-Country Growth Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 11(2), pages 163-190, June.
    25. Timothy J. Coelli & D.S. Prasada Rao & Christopher J. O’Donnell & George E. Battese, 2005. "An Introduction to Efficiency and Productivity Analysis," Springer Books, Springer, edition 0, number 978-0-387-25895-9, December.
    26. Tybout, James R, 1992. "Linking Trade and Productivity: New Research Directions," The World Bank Economic Review, World Bank, vol. 6(2), pages 189-211, May.
    27. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    28. International Monetary Fund, 2004. "Republic of Korea: 2003 Article IV Consultation—Staff Report; Staff Statement; Public Information Notice on the Executive Board Discussion; and Statement by the Executive Director for the Republic of ," IMF Staff Country Reports 2004/044, International Monetary Fund.
    29. Patricia Augier & Marion Dovis & Michael Gasiorek, 2012. "The business environment and Moroccan firm productivity," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 20(2), pages 369-399, April.
    30. Alberto Abadie & Guido W. Imbens, 2006. "Large Sample Properties of Matching Estimators for Average Treatment Effects," Econometrica, Econometric Society, vol. 74(1), pages 235-267, January.
    31. Ricardo Hausmann & Michael Gavin, 1996. "Securing Stability and Growth in a Shock Prone Region: The Policy Challenge for Latin America," Research Department Publications 4020, Inter-American Development Bank, Research Department.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daniel Sotelsek & Leopoldo Laborda, 2010. "Technical Efficiency and Value Chain of Eastern European Union Companies: An Empirical Application using Semi-Parametric Frontier Methods," Working Papers 04/10, Instituto Universitario de Análisis Económico y Social.
    2. Inha Oh & Jeong-Dong Lee & Almas Heshmati & Gyoung-Gyu Choi, 2009. "Evaluation of credit guarantee policy using propensity score matching," Small Business Economics, Springer, vol. 33(3), pages 335-351, October.
    3. Asdrubali, Pierfederico & Signore, Simone, 2015. "The Economic Impact of EU Guarantees on Credit to SMEs – Evidence from CESEE Countries," EIF Working Paper Series 2015/29, European Investment Fund (EIF).
    4. Wijesiri, Mahinda & Yaron, Jacob & Meoli, Michele, 2017. "Assessing the financial and outreach efficiency of microfinance institutions: Do age and size matter?," Journal of Multinational Financial Management, Elsevier, vol. 40(C), pages 63-76.
    5. Oliver Tiemann & Jonas Schreyögg, 2012. "Changes in hospital efficiency after privatization," Health Care Management Science, Springer, vol. 15(4), pages 310-326, December.
    6. Aziz Karimov, 2013. "Productive Efficiency of Potato and Melon Growing Farms in Uzbekistan: A Two Stage Double Bootstrap Data Envelopment Analysis," Agriculture, MDPI, vol. 3(3), pages 1-13, September.
    7. Sucharita Ghosh & Camilla Mastromarco, 2013. "Cross-border Economic Activities, Human Capital and Efficiency: A Stochastic Frontier Analysis for OECD Countries," The World Economy, Wiley Blackwell, vol. 36(6), pages 761-785, June.
    8. Masci, Chiara & De Witte, Kristof & Agasisti, Tommaso, 2018. "The influence of school size, principal characteristics and school management practices on educational performance: An efficiency analysis of Italian students attending middle schools," Socio-Economic Planning Sciences, Elsevier, vol. 61(C), pages 52-69.
    9. Thiago Victorino & Carlos Rosano Peña, 2023. "The Development of Efficiency Analysis in Transportation Systems: A Bibliometric and Systematic Review," Sustainability, MDPI, vol. 15(13), pages 1-32, June.
    10. Wijesiri, Mahinda & Yaron, Jacob & Meoli, Michele, 2015. "Performance of microfinance institutions in achieving the poverty outreach and financial sustainability: When age and size matter?," MPRA Paper 69821, University Library of Munich, Germany.
    11. Dongphil Chun & Yanghon Chung & Chungwon Woo & Hangyeol Seo & Hyesoo Ko, 2015. "Labor Union Effects on Innovation and Commercialization Productivity: An Integrated Propensity Score Matching and Two-Stage Data Envelopment Analysis," Sustainability, MDPI, vol. 7(5), pages 1-19, April.
    12. Franz R. Hahn, 2007. "Determinants of Bank Efficiency in Europe. Assessing Bank Performance Across Markets," WIFO Studies, WIFO, number 31499, April.
    13. Isabel-María García-Sánchez & Luis Rodríguez-Domínguez & Javier Parra-Domínguez, 2013. "Yearly evolution of police efficiency in Spain and explanatory factors," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 21(1), pages 31-62, January.
    14. Jo, Ah-Hyun & Chang, Young-Tae, 2023. "The effect of airport efficiency on air traffic, using DEA and multilateral resistance terms gravity models," Journal of Air Transport Management, Elsevier, vol. 108(C).
    15. Daley, Jenifer & Matthews, Kent & Zhang, Tiantian, 2011. "Post-crisis cost efficiency of Jamaican banks," Cardiff Economics Working Papers E2011/27, Cardiff University, Cardiff Business School, Economics Section.
    16. Ben Lockwood & Francesco Porcelli, 2013. "Incentive Schemes for Local Government: Theory and Evidence from Comprehensive Performance Assessment in England," American Economic Journal: Economic Policy, American Economic Association, vol. 5(3), pages 254-286, August.
    17. Santos, Joana & Simões, Pedro & Costa, Álvaro & Cunha Marques, Rui, 2010. "Efficiency of the Portuguese metros. is it different from other European metros?," MPRA Paper 34904, University Library of Munich, Germany.
    18. Chen, Minjia & Guariglia, Alessandra, 2013. "Internal financial constraints and firm productivity in China: Do liquidity and export behavior make a difference?," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1123-1140.
    19. Thanh Ngo & Kan Wai Hong Tsui, 2022. "Estimating the confidence intervals for DEA efficiency scores of Asia-Pacific airlines," Operational Research, Springer, vol. 22(4), pages 3411-3434, September.
    20. Kaffash, Sepideh & Azizi, Roza & Huang, Ying & Zhu, Joe, 2020. "A survey of data envelopment analysis applications in the insurance industry 1993–2018," European Journal of Operational Research, Elsevier, vol. 284(3), pages 801-813.

    More about this item

    Keywords

    Access to Finance; Environmental Economics&Policies; Debt Markets; Economic Theory&Research; Labor Policies;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:6101. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.