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Bankruptcy Risk and Productive Efficiency in Manufacturing Firms

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Listed author(s):
  • Leonardo Becchetti

    ()

    (University of Rome II - Faculty of Economics)

  • Jaime Humberto Sierra Gonzalez 2

    ()

    (Pontifical University Javeriana Inicio - Department of Economics)

Abstract

The paper investigates the determinants of bankruptcy in three representative unbalanced samples of Italian firms for the periods 1989-1991, 1992-94 and 1995-97. Two important results are that: i) the degree of relative firm inefficiency measured as the distance from the efficient frontier has significant explanatory power in predicting bankruptcy ii) qualitative regressors such as customers' concentration and strength and proximity of competitors have significant predictive power and suggest that banks should not restrict their monitoring activity to balance sheet variables. These findings remain significant after controlling for balance sheet liquidity and profitability variables usually considered in these estimates

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Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 30.

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Length: 32
Date of creation: 11 Aug 2003
Handle: RePEc:rtv:ceisrp:30
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CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma

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Keywords: bankruptcy prediction; stochastic frontiers; qualitative indicators;

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Find related papers by JEL classification:
  • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
  • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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  1. Fanti Luciano, 1997. "Inefficienza tecnica e di scala: un'applicazione all'industria italiana di una frontiera flessibile di produzione," L'industria, Società editrice il Mulino, issue 2, pages 271-282.
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  22. repec:bla:joares:v:4:y:1966:i::p:71-111 is not listed on IDEAS
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