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Technical efficiency change and finance constraints: an empirical analysis for the Italian manufacturing, 1989-1994

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  • Vania Sena

Abstract

The purpose of this paper is to test whether finance constraints create an incentive for debt-constrained firms to improve efficiency along time, using a sample of 1124 firms from the Italian manufac- turing over the period 1989-1994. Technical efficiency change indices are derived using a new approach based on the estimation of distance parametric frontiers. These are then regressed on measures of fin- ance constraints to analyze their impact on firms' efficiency growth. The results support the hypothesis that technical efficiency change is affected by the external resources availability; more precisely, once a firm is subject to finance constraints, it has an incentive to improve its technical efficiency over time to guarantee positive profits and gains in productivity.

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  • Vania Sena, "undated". "Technical efficiency change and finance constraints: an empirical analysis for the Italian manufacturing, 1989-1994," Discussion Papers 98/8, Department of Economics, University of York.
    • Handle: RePEc:yor:yorken:98/8
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    File URL: https://www.york.ac.uk/media/economics/documents/discussionpapers/1998/9808.pdf
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    Cited by:

    1. Francisco Gallego Y. & Norman Loayza., 2000. "Financial Structure in Chile: Macroeconomic Developments and Microeconomic Effects," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 3(2), pages 5-30, August.
    2. Zhang, Dongyang & Jin, Yue, 2021. "R&D and environmentally induced innovation: Does financial constraint play a facilitating role?," International Review of Financial Analysis, Elsevier, vol. 78(C).

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