ITEM METADATA RECORD
Title: Financial constraints: state aid to the rescue?
Authors: Sergant, Ilona
Issue Date: 2016
Publisher: KU Leuven, Department of Economics
Series Title: Working paper pages:1-34
Abstract: This paper investigates the relationship between state aid measures as defined by Article 107 of the TFEU, and firm performance in terms of total factor productivity (𝑇𝐹𝑃). Under imperfect capital markets, firms might encounter difficulties in accessing sufficient resources to fund their optimal investment plans. The main focus of this paper lies in establishing whether state aid alleviates a firm from such constraints, and thereby enhances efficiency. To this end, we use all state aid cases that were active in Belgian manufacturing between 2002 and 2011. To determine the effects of state aid and financing constraints on performance, we first estimate TFP and classify firms according to their financial health in the absence of aid. The main results confirm the hypothesis but when allowing for firm heterogeneity, the mitigating role of state aid is only present for initially efficient firms.
Publication status: published
KU Leuven publication type: IR
Appears in Collections:Research Center of Monetary and Information Economics, Leuven

Files in This Item:
File Description Status SizeFormat
Sergant I (2016) Financial Constraints - SA to the Rescue (2016).pdf Published 1146KbAdobe PDFView/Open Request a copy

These files are only available to some KU Leuven Association staff members

 




All items in Lirias are protected by copyright, with all rights reserved.