This study investigates the role of technical efficiency in predicting the probability of default of a sample of Italian SMEs in the period 2007-2009. This specific period is of particular interest because it is centered on the beginning of the Global Financial Crisis. We argue that technical efficiency allows for a forward-looking perspective and can contribute to shed more light on the reasons behind the default of many Italian SMEs in the particular period considered. The technical efficiency is estimated with a stochastic frontier approach and the efficiency ratio is used as independent variable, along with several financial ratios. Consistently with the literature, the results suggest that efficiency is a good predictor when the financial ratios are also considered. Several robustness checks support the preliminary findings.

Efficiency and corporate bankruptcy predictions

PIATTI, Domenico;CINCINELLI, Peter;CASTELLANI, Davide
2015-09-01

Abstract

This study investigates the role of technical efficiency in predicting the probability of default of a sample of Italian SMEs in the period 2007-2009. This specific period is of particular interest because it is centered on the beginning of the Global Financial Crisis. We argue that technical efficiency allows for a forward-looking perspective and can contribute to shed more light on the reasons behind the default of many Italian SMEs in the particular period considered. The technical efficiency is estimated with a stochastic frontier approach and the efficiency ratio is used as independent variable, along with several financial ratios. Consistently with the literature, the results suggest that efficiency is a good predictor when the financial ratios are also considered. Several robustness checks support the preliminary findings.
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set-2015
Piatti, Domenico; Cincinelli, Peter; Castellani, Davide
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10446/58805
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