Luca Sensini

Forecasting corporate bankruptcy: empirical evidence on Italian data

Purpose – The aim of the paper is to investigate several aspects of bankruptcy prediction within both theoretical and empirical frameworks. In particular, it has focused on the comparison of different techniques used to forecast failure through a balanced sample of companies within a geographical area (the Campania region) located in the south of Italy.Methodology – Business failure has been one of the most investigated topics within corporate finance and the empirical approach to bankruptcy prediction has recently gained further attention from financial institutions. The aim of corporate failure prediction is to have a methodological approach which discriminates firms with a high probability of future failure from those which are considered to be healthy. Starting from the seminal paper of Altman (1968), many other significant contributions have been subsequently made to this field (Ravi Kumar and Ravi, 2007). This papers approach is to compare different statistical techniques based on the analysis of f...

Nonrenewable Resources, Income Inequality and Per Capita GDP: An Empirical Analysis

This analysis examines the relationship between nonrenewable resource dependence, economic growth and income inequality. It uses a two-equation system in which the Gini index and GDP per capita are the dependent variables and the stock of nonrenewable resources as a share of national wealth -- i.e. resource dependence -- is the independent variable. Using a dataset that includes information on 43 countries from 1980 to 2012, this paper estimates several model specifications in order to check the robustness of the results under different assumptions and to account for income-group-related heterogeneity among countries. The baseline model provides strong evidence that natural resource dependence is negatively correlated with both per capita GDP and the Gini index; in other words, resource dependence is associated with lower income levels, but also with a more equal distribution of income. Interestingly, however, after controlling for country income group, the sign and magnitude of these relationships appear to become dependent on national-level structural characteristics. Among higher-income countries, greater nonrenewable natural resource dependence is associated with lower income inequality, while there is no statistically significant correlation with GDP per capita. Among the lower-income group, greater dependence on nonrenewable natural resources is associated with both higher levels of income inequality and lower per capita GDP. Further analysis focusing on a subsample of non-renewable resource rich countries confirms these findings.

Fiscal incentives and firm performance : evidence from the Dominican Republic

This paper evaluates the impact of fiscal incentives on firm performance in the Dominican Republic. In recent years, the Dominican government has approved several new corporate tax benefits. While the literature on value-added tax incentives is extensive, the impact of corporate tax incentives is less well studied and is the subject of an ongoing debate. Using firm-level panel data from 2006 to 2015, this analysis uses fixed- and random-effects models to examine the relationship between corporate tax incentives and selected firm-level performance indicators. The results reveal that corporate income tax exemptions positively impact the performance of individual firms in the Dominican Republic, but uneven tax treatment across firms distorts competition in the industrial sector, with negative effects on overall economic productivity.

Financial Access and Household Welfare: Evidence from Mauritania

This paper evaluates the impact of access to credit from banks and other financial institutions on household welfare in Mauritania. Micro-level data from a 2014 household survey are used to evaluate the relationship between credit access, a range of household characteristics, and welfare indicators. To address potential endogeneity issues, the household isolation level is used to instrument access to credit. The results show that households headed by older, more educated people are more likely to access financial services, as are households located in urban areas. In addition, greater financial access appears to be associated with a reduced dependence on household production and increased investment in human capital.

An Empirical Comparison of Variable Selection Methods in Competing Risks Model

The variable selection is a challenging task in statistical analysis. In many real situations, a large number of potential predictors are available and a selection among them is recommended. For dealing with this problem, the automated procedures are the most commonly used methods, without taking into account their drawbacks and disadvantages. To overcome them, the shrinkage methods are a good alternative. Our aim is to investigate the performance of some variable selection methods, focusing on a statistical procedure suitable for the competing risks model. In this theoretical setting, the same variables might have different degrees of influence on the risks due to multiple causes and this has to be taken into account in the choice of the “best” subset. The proposed procedure, based on shrinkage techniques, is evaluated by means of empirical analysis on a data-set of financial indicators computed from a sample of industrial firms annual reports.

Variable selection in forecasting models for default risk

The aim of the paper is to investigate different aspects involved in developing prediction models in default risk analysis. In particular, we focused on the comparison of different statistical methods addressing several issues such as the structure of the data-base, the sampling procedure and the selection of financial predictors by means of different variable selection techniques. The analysis is carried out on a data-set of accounting ratios created from a sample of industrial firms annual reports. The reached findings aim to contribute to the elaboration of efficient prevention and recovery strategies.