Institutions and Creative Destruction in CEECs: Determinants of Inefficient Use of Assets

Jarko Fidrmuc and Martin Siddiquiy ()

No 353, Working Papers from Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies)

Abstract: We analyze the relationship between institutional quality and firm efficiency. Using rich data on firms in the European Union between 2005 and 2012, we show that high institutional quality lowers the share of persistently inefficiently used assets. The adverse effect of low institutional quality may be one of the narrow channels through which institutions affect income per capita in the long-run. Our approach combines institutional economics and Schumpeterian creative destruction. In addition, we observe similarities between inefficiently used assets in Europe and the phenomenon of zombie lending in Japan during the last decades.

Keywords: Institutions; Unproductive Assets; European Union; Creative Destruction (search for similar items in EconPapers)
JEL-codes: C33 K23 O43 (search for similar items in EconPapers)
Pages: 22
Date: 2015-10
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Related works:
Working Paper: Institutions and Creative Destruction in CEECs: Determinants of Inefficient Use of Assets (2015)
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