Budget Constraints and Profitability: Evidence from a Transition Economy

Marian Rizov

LICOS Discussion Papers from LICOS - Centre for Institutions and Economic Performance, KU Leuven

Abstract: A conceptual framework for analyzing the credit rationing and the link between credit access and profitability is developed. The empirical analysis using data from manufacturing firms in Bulgaria, provides direct estimates of credit rationing and its impact on profitability in transition economies. The results from the switching regression suggest that the presence of credit market constraints does impinge on profitability of credit rationed firms and support the credit crunch hypothesis for periods following the financial market collapse as a result of previous soft budget constraints.

Keywords: credit rationing; profitability; economies in transition; Bulgaria (search for similar items in EconPapers)
JEL-codes: G3 L2 P2 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2002
New Economics Papers: this item is included in nep-eff, nep-fin, nep-mfd and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:lic:licosd:11602

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