Financial performance in manufacturing firms: a comparison between parametric and non parametric approaches

Eleonora Bartoloni and Maurizio Baussola ()

No dises1282, DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali from Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE)

Abstract: This paper provides a methodological analysis of credit risk in manufacturing firms by using two different credit scoring approaches. The first is the traditional discriminant approach (DA) for bankruptcy prediction based on a logistic regression model, whereas the second, Data Envelopment Analysis (DEA), is a non-parametric approach for measuring firms’ efficiency which do es not require ex-ante information on bankrupted firms. By using a manufacturing sample of both healthy and bankrupted firms during the period 2003-2009 we provide an in-depth comparison of DA and DEA and conclude that a correct evaluation of firms’ credit worthiness is the result of successive fine tuning procedures requiring the use of multiple methodological tools.

Keywords: Bankruptcy; Discriminant Analysis; Data Envelopment; Analysis; Credit rating (search for similar items in EconPapers)
JEL-codes: G32 L25 O32 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2012-05
New Economics Papers: this item is included in nep-eff
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Related works:
Journal Article: Financial Performance in Manufacturing Firms: A Comparison Between Parametric and Non-Parametric Approaches (2014)
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