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Financial Performance in Manufacturing Firms: A Comparison Between Parametric and Non-Parametric Approaches

Eleonora Bartoloni and Maurizio Baussola ()

Business Economics, 2014, vol. 49, issue 1, 32-45

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 for bankruptcy prediction based on a logistic regression model, whereas the second, data envelopment analysis, is a nonparametric approach for measuring firms’ efficiency that does not require ex-ante information on bankrupted firms. By using a manufacturing sample of both healthy and bankrupted firms during the period 2003–09 we provide an in-depth comparison of discriminant analysis and data envelopment analysis 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.

Date: 2014
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Working Paper: Financial performance in manufacturing firms: a comparison between parametric and non parametric approaches (2012) Downloads
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Handle: RePEc:pal:buseco:v:49:y:2014:i:1:p:32-45