A panel analysis of UK industrial company failure

We examine the failure determinants for large quoted UK industrials using a panel data set comprising 539 firms observed over the period 1988-93. The empirical design employs data from company accounts and is based on Chamberlain’s conditional binomial logit model, which allows for unobservable, firm-specific, time-invariant factors associated with failure risk. We find a noticeable degree of heterogeneity across the sample companies. Our panel results show that, after controlling for unobservables, lower liquidity measured by the quick assets ratio, slower turnover proxied by the ratio of debtors turnover, and profitability were linked to the higher risk of insolvency in the analysis period. The findings appear to support the proposition that the current cash-flow considerations, rather than the future prospects of the firm, determined company failures over the 1990s recession

Some Further Evidence on Exchange-Rate Volatility and Exports

The relationship between exchange-rate volatility and aggregate export volumes for 12 industrial economies is examined using a model that includes real export earnings of oil-producing economies as a determinant of industrial-country export volumes. A supposition underlying the model is that, given their levels of economic development, oil-exporters’ income elasticities of demand for industrial-country exports might differ from those of industrial countries. Five estimation techniques, including a generalized method of moments (GMM) and random coefficient (RC) estimation, are employed on panel data covering the estimation period 1977:1-2003:4 using three measures of volatility. In contrast to recent studies employing panel data, we do not find a single instance in which volatility has a negative and significant impact on trade.Exchange-rate volatility; Trade; Random-coefficient estimation; Generalized method of moments; Panel

Labour Law, Judicial Efficiency and Informal Employment in India

This study assesses the effects of industrial disputes legislation and the dispute settlement process on informal versus formal employment in India. It uses indicators of pro-worker court awards and court efficiency as well as amendments to the Industrial Disputes Act (IDA) at the level of Indian states. The state-level IDA amendments are classified as pro-worker or pro-employer and enforcement enhancing. Three complementary empirical approaches and data sources are used. These include a quasi-panel dataset constructed from four household employment surveys (NSSO) between 1983-1999, a state-industry level panel dataset for organised (formal) sector industrial units (ASI) for 1980-1997 and a cross-sectional survey of unorganised (informal) manufacturing firms for 2000/2001.Informal employment, labour law, industrial disputes, judicial efficiency, employment structure

A Panel Analysis Of UK Industrial Company Failure

We examine the failure determinants for large quoted UK industrials using a panel data set comprising 539 firms observed over the period 1988-93. The empirical design employs data from company accounts and is based on Chamberlain's conditional binomial logit model, which allows for unobservable, firm-specific, time-invariant factors associated with failure risk. We find a noticeable degree of heterogeneity across the sample companies. Our panel results show that, after controlling for unobservables, lower liquidity measured by the quick assets ratio, slower turnover proxied by the ratio of debtors turnover, and profitability were linked to the higher risk of insolvency in the analysis period. The findings appear to support the proposition that the current cash-flow considerations, rather than the future prospects of the firm, determined company failures over the 1990s recession.Company Failure Risk, Unobserved Heterogeneity, Conditional Fixed Effects Logit Model

The Effects of Intraregional Disparities on Regional Development in China: Inequality Decomposition and Panel-Data Analysis

This paper analyzes the development and effects of intra-provincial regional disparities in China between 1989 and 2001. A decomposition analysis shows that intraprovincial disparities contribute significantly to total regional inequality. In the second part of the paper, the impact of the observed intraprovincial disparities on regional economic development is addressed. Using provincial panel data on industrial growth, capital and employment, the impact of inequality on industrial growth is estimated as affecting technical efficiency and level of technology. The results show a significant positive effect of intra-provincial disparities on provincial industrial growth, with causality from inequality to growth. Moreover, it appears that the inequality-growth relationship is not a linear one, but rather that the impact of extreme changes in inequality is stronger and more significant than a moderate increase in inequality. These outcomes are robust to alternative model specifications and control variablInequality, Decomposition, Growth, Panel Data, China

Firm exit and spatial agglomeration. Evidence on the resilience of Italian provinces

The paper investigates the effect of spatial agglomeration on firm exit. In particular, the role of specialization and local variety in production is addressed. The extent to which industrial clusters can be actually retained industrial districts is also considered. Empirical evidence is provided for a large panel of Italian provinces and manufacturing sectors over the period 1995-2007. Urbanization economies significantly diminish firm exit of industries at the local level. Specialization also does, but only up to a certain level. Firm exit is also reduced by industrial variety, even far from the local specialization core. Industrial districts, instead, are neither less nor more resilient to industrial dynamics, unless variety is controlled for.Firm exit, Firm survival, Industrial districts, Spatial agglomeration, Related variety, Unrelated variety

Bridging Canadian Technology SMEs Over the Valley of Death

This comment analyses the Panel report and finds that its main diagnosis is correct: Canada's BERD is low. The Panel report is fairly silent about the necessary improvements to Canada's innovation system. This comment suggests that while Canada's tax credit for R&D and Industrial Research Assistance Program (IRAP) are useful programs, they need to be complemented by other direct incentives that may help small technology firms to cross the "valley of death", complete proof of concept and become eligible to venture capital. The US Small Business Innovation Research (SBIR) program, imitated by Japan, is the best model for such an incentive and Canada should consider its adoption.Review, innovation, productivity, Industrial Research Assistance Program, Small Business Innovation Research program, public policy

Exchange rate regime and real exchange rate behavior

This paper examines exchange rate regimes from the viewpoint of the validity of purchasing power parity (PPP). Specifically, we analyze real exchange rate behavior under various classifications of exchange rate arrangement through panel unit root tests, and also investigate the adjustment speed of nominal exchange rate and relative prices separately through an error correction framework. Our findings are as follows: First, as a result of the panel unit root tests on real exchange rate behavior, industrial countries under “free float†reveal REER stability even though the test results show weak support for this speculation, while developing countries under “hard peg†definitely represent the REER stability, and have full support from the tests. Second, error correction analysis tells us that in industrial countries under “free float,†the adjustment of nominal exchange rate was faster than that of relative prices, while in developing countries under “hard peg†the adjustment of relative prices is faster that that of the nominal exchange rate. We speculate that industrial countries under free float may render exchange rate movements sensitive to the inflation gap, and that developing countries under “hard peg†may produce nonlinear price adjustments toward the REER long-run equilibrium through an anchor-effect of peg on price stabilization.real (effective) exchange rate, exchange rate arrangement, panel unit root tests, error correction analysis, nonlinear price adjustment

Innovation and training: a dynamic count data model.

This paper explores the relationship between innovation and vocational training. We consider a linear feedback model to explain the dynamics of count data processes relative to patenting activities, R&D and training expenditures. Estimations are made on a panel data set relative to French industrial rms over the period 1986-1992. Our results indicate that the vocational training have a positive impact on the technological innovation.count panel data; linear feedback model; patents; R&D; training;

Modelling OECD Industrial Energy Demand: Asymmetric Price Responses and Energy – Saving Technical Change

The industrial sector embodies a multifaceted production process consequently modelling the ‘derived demand’ for energy is a complex issue; made all the more difficult by the need to capture the effect of technical progress of the capital stock. This paper is an exercise in econometric modelling of industrial energy demand using panel data for 15 OECD countries over the period 1962 – 2003 exploring the issue of energy-saving technical change and asymmetric price responses. Although difficult to determine precisely, it is tentatively concluded that the preferred specification for OECD industrial energy demand incorporates asymmetric price responses but not exogenous energysaving technical change.OECD Industrial energy demand; Asymmetry; Energy-saving technical change; Modelling