Bankruptcy Risk and Productive Efficiency in Manufacturing Firms

Leonardo Becchetti and Jaime Humberto Sierra Gonzalez 2 ()
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Jaime Humberto Sierra Gonzalez 2: Pontifical University Javeriana Inicio - Department of Economics

CEIS Research Paper from Tor Vergata University, CEIS

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

Keywords: bankruptcy prediction; stochastic frontiers; qualitative indicators (search for similar items in EconPapers)
JEL-codes: D21 G21 (search for similar items in EconPapers)
Pages: 32
Date: 2003-08-11
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Citations: View citations in EconPapers (52)

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Journal Article: Bankruptcy risk and productive efficiency in manufacturing firms (2003)
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