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Bankruptcy Risk and Productive Efficiency in Manufacturing Firms

Author

Listed:
  • 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

Suggested Citation

  • Leonardo Becchetti & Jaime Humberto Sierra Gonzalez 2, 2003. "Bankruptcy Risk and Productive Efficiency in Manufacturing Firms," CEIS Research Paper 30, Tor Vergata University, CEIS.
    • Handle: RePEc:rtv:ceisrp:30
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    bankruptcy prediction; stochastic frontiers; qualitative indicators;
    All these keywords.

    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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