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The Impact Of Financial Structure On Firms’ Probability Of Bankruptcy: A Comparison Across Western Europe Convergence Regions

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  • Marianna SUCCURRO
  • Lidia MANNARINO

Abstract

The aim of the paper is to investigate the impact of financial structure on firms’ probability of bankruptcy in Western Europe convergence regions. The empirical evidence shows that the financial structure is a key factor explaining firms’ bankruptcy, but while the debt, the cash flow and the profitability ratios are strongly significant in explaining firms’ failure, structure and operational ratios are not relevant factors of bankruptcy. Additional differences arise when we consider the countries separately: while debt and cash flow ratios are significant for bank based economies, they are not significant for market oriented countries.

Suggested Citation

  • Marianna SUCCURRO & Lidia MANNARINO, 2014. "The Impact Of Financial Structure On Firms’ Probability Of Bankruptcy: A Comparison Across Western Europe Convergence Regions," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 14(1), pages 81-94.
    • Handle: RePEc:eaa:eerese:v:14:y2014:i:1_6
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    Cited by:

    1. C. Justin ROBINSON & Prosper F. BANGWAYO-SKEETE, 2017. "Market Efficiency, Sovereign Debt Restructuring And Credit Ratings In Developing Countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 17(1), pages 5-18.
    2. SMETANINA, Anastasia Igorevna & MOROZOVA, Irina Anatolievna, 2015. "Infrastructural Support Of Electronic Payment Systems Markets In Russia," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 15(1), pages 57-68.
    3. Marianna Succurro, 2017. "Financial Bankruptcy across European Countries," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(7), pages 132-146, July.
    4. Lisa Crosato & Caterina Liberati & Marco Repetto, 2021. "Look Who's Talking: Interpretable Machine Learning for Assessing Italian SMEs Credit Default," Papers 2108.13914, arXiv.org, revised Sep 2021.

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    More about this item

    Keywords

    Financial Structure; Probability of Bankruptcy; Convergence Regions.;
    All these keywords.

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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