22 Pages Posted: 20 Feb 2002
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, manufacturing, Bulgaria
JEL Classification: G3, L2, P2
Suggested Citation: Suggested Citation
Rizov, Marian, Budget Constraints And Profitability: Evidence From A Transition Economy. LICOS Working Paper; EFA 2002 Berlin Meetings Presented Paper. Available at SSRN: https://ssrn.com/abstract=301039 or http://dx.doi.org/10.2139/ssrn.301039