Overdraft Facility Policy and Firm Performance: An Empirical Analysis in Eastern European Union Industrial Firms

31 Pages Posted: 20 Apr 2016

See all articles by Leopoldo Laborda Castillo

Leopoldo Laborda Castillo

affiliation not provided to SSRN

J. Luis Guasch

World Bank - Finance, Private Sector and Infrastructure Sector (LCSFP)

Date Written: June 1, 2012

Abstract

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.

Keywords: Access to Finance, Environmental Economics & Policies, Debt Markets, Economic Theory & Research, Labor Policies

Suggested Citation

Castillo, Leopoldo Laborda and Guasch, José Luis, Overdraft Facility Policy and Firm Performance: An Empirical Analysis in Eastern European Union Industrial Firms (June 1, 2012). World Bank Policy Research Working Paper No. 6101. Available at SSRN: https://ssrn.com/abstract=2088726

Leopoldo Laborda Castillo (Contact Author)

affiliation not provided to SSRN

No Address Available

José Luis Guasch

World Bank - Finance, Private Sector and Infrastructure Sector (LCSFP) ( email )

1818 H Street, NW
Washington, DC 20433
United States
202 473 8606 (Phone)
202 522 2106 (Fax)

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