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Industrial spatial dynamics, financial health and bankruptcy: evidence from Italian manufacturing industry

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  • Greta Falavigna

    (CNR-Ceris (National Research Council of Italy-Institute for Economic Research on Firms and Growth))

  • Roberto Ippoliti

    (University of Turin)

Abstract

Considering the Italian manufacturing industry (more than 100,000 enterprises) and a panel of 6 years (from 2005 to 2010), we investigate the relation between the time necessary to define a bankruptcy case and the concentration of enterprises with good financial health. In particular, recalling the seminal work of Modigliani and Miller (Am Econ Rev 48(3):261–297, 1958), we test the hypothesis that the enforcement of creditors’ rights can affect managers’ strategies, and the related risks. According to results, judicial delay can affect the industrial spatial dynamics and regional development, confirming the key role of judiciary. Indeed, we identify a statistically significant relation between the time necessary to enforce creditors’ rights and the concentration of healthy enterprises for several manufacturing industrial sectors. The policy implications of this work concern the opportunity of reforming the national bankruptcy law and courts’ organization to support the national economic growth.

Suggested Citation

  • Greta Falavigna & Roberto Ippoliti, 2018. "Industrial spatial dynamics, financial health and bankruptcy: evidence from Italian manufacturing industry," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(4), pages 533-554, December.
    • Handle: RePEc:spr:epolin:v:45:y:2018:i:4:d:10.1007_s40812-018-0102-4
    DOI: 10.1007/s40812-018-0102-4
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    Cited by:

    1. Greta Falavigna & Roberto Ippoliti, 2022. "Financial constraints, investments, and environmental strategies: An empirical analysis of judicial barriers," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2002-2018, July.
    2. Manuel Rico & Santiago Cantarero & Francisco Puig, 2021. "Regional Disparities and Spatial Dependence of Bankruptcy in Spain," Mathematics, MDPI, vol. 9(9), pages 1-20, April.

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    More about this item

    Keywords

    Financial rating; Manufacturing industry; Bankruptcy; Judicial efficiency;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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