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Overdraft facility policy and firm performance : an empirical analysis in eastern European Union industrial firms (English)

This article evaluates the effect of the overdraft facility (or line of credit) policy by comparing a large sample of overdraft facilitated firms and matched non-overdraft facilitated firms from Eastern Europe at the sector level. The sample firms are compared with respect to rates of different performance indicators including: technical efficiency (a Data Envelopment Analysis approach is applied to estimate the technical efficiency level for individual sectors), production workers trained, expenditures on research and development, and export activity. In order to avoid the selectivity problem, propensity score matching methodologies are adopted. The results suggest that a certain level of overdraft facility provided to firms would be needed to stimulate investment in research and development, which will eventually result in increased growth in productivity.

Details

  • Author

    Castillo, Leopoldo Laborda Guasch, Jose Luis

  • Document Date

    2012/06/01

  • Document Type

    Policy Research Working Paper

  • Report Number

    WPS6101

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Europe,

  • Region

    Europe and Central Asia,

  • Disclosure Date

    2012/06/01

  • Disclosure Status

    Disclosed

  • Doc Name

    Overdraft facility policy and firm performance : an empirical analysis in eastern European Union industrial firms

  • Keywords

    overdraft facility;Finance & Private Sector;small and medium size enterprise;exploitation of scale economies;Southern and Eastern;quality of public service;increase in interest rate;evaluation of loan application;access to finance;propensity score matching;official exchange rate;private financial sector;Exchange Rates;per capita income;private financial institution;private finance source;global financial crisis;investment in research;higher interest rate;direct foreign investment;amount of fund;degree of heterogeneity;infrastructure and services;balance sheet information;regulatory compliance cost;internationally comparable data;hours of operation;cost of electricity;costs of communication;maximum likelihood estimation;measure output;safe water access;observable variable;efficiency score;conversion factor;selection bias;confidence interval;matching method;standard error;government support;business environment;bootstrap technique;loan market;financial constraint;productive sector;imperfect information;adverse selection;moral hazard;export activity;smaller number;capital stock;random sample;functional form;negative effect;human capital;industrial sector;permanent worker;population parameter;credit rationing;measurement error;evaluation technique;efficiency index;market failure;counterfactual outcome;road density;financial service;mediterranean countries;financial market;Investment Flow;production cost;indicator variable;financial statement;land access;Land Ownership;domestic credit;control information;integration process;social cohesion;productivity measurement;investment expenditure;external demand;land area;Macroeconomic Policy;empirical analysis;statistical distribution;considerable disagreement;empirical literature;industrial institution;contract enforcement;model specification;output factors;food sector;program effect;logistic regression;empirical findings;energy cost;production function;credit guarantee;survey instrument;uniform sampling;business decision;investment climate;production capacity;asymmetric information;sample representative;manufacturing sector;manufacturing industry;raw material;infrastructure endowment;causal relationship;education level;empirical result;public support;credit default;financial difficulties;sample selection;high sensitivity;baseline data;account balance;descriptive statistic;crowding out;democratic institution;market economy;competitive world;european space;individual sectors;technical facilities;loan contract;increase growth;restructuring process;private exporter;foreign bank;external credit;quantitative research;internal finance;real capital;positive spillover;positive outcome;sample period;loan applicant;credit line;Cash flow;working capital;default rate;market environment;intermediate input;school enrollment;goods manufacture;agricultural sector;foreign trade;merchandise import;trade balance;foreign exporter;treatment group;tariff barrier;consumer price;credit market;relative price;open access;development policy;production increase;exogenous shift;firm size;firm performance;budgetary deficit;technological capital;policy priority;market size;manufactured products;account data;red tape;explanatory variable;mathematical model;input use;sampling distribution;estimation strategy;present study;environmental variable;exogenous factor;outcome measure;reference point;evaluation method;point estimate;productive resource;statistical inference;production volume;efficient production;linear combination;principal justification;full employment;book value;local stock;fixed asset;Fixed Assets;

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Citation

Castillo, Leopoldo Laborda Guasch, Jose Luis

Overdraft facility policy and firm performance : an empirical analysis in eastern European Union industrial firms (English). Policy Research working paper ; no. WPS 6101 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/289181468256190136/Overdraft-facility-policy-and-firm-performance-an-empirical-analysis-in-eastern-European-Union-industrial-firms