Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/36909
Authors: 
Coricelli, Fabrizio
Driffield, Nigel
Pal, Sarmistha
Roland, Isabelle
Year of Publication: 
2010
Series/Report no.: 
Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 4834
Abstract: 
The paper examines the relationship between leverage and growth in a group of emerging central and eastern European countries, who are at different levels of financial market development. We hypothesize a non-linear relationship in that moderate leverage could boost growth while very high leverage could lower it by increasing the likelihood of financial distress and bankruptcy. Estimates of a Threshold model confirm the non-linear relationship in our sample, after controlling for various firm, industry and financial market characteristics. We also endogenously determine a threshold level of leverage beyond which further increases in leverage could lower TFP growth.
Subjects: 
Excess leverage
bank efficiency
market capitalization
TFP growth
Threshold model
non-linear relationship
transition experience
JEL: 
G32
O16
Document Type: 
Working Paper

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