Journal of Evolutionary Economics

, Volume 21, Issue 3, pp 373–406 | Cite as

Financial and economic determinants of firm default

  • Giulio BottazziEmail author
  • Marco Grazzi
  • Angelo Secchi
  • Federico Tamagni
Regular Article


This paper investigates the relevance of financial and economic variables as determinants of firm default. Our analysis covers a large sample of medium-sized limited liability firms. Since default might lead, through bankruptcy or radical restructuring, to firm’s exit, our work also relates to previous contributions on industrial demography. Using non parametric tests we assess to what extent defaulting firms differ from the non-defaulting group. Bootstrap probit regressions confirm that economic variables, in addition to standard financial indicators, play both a long and short term effect. Our findings are robust with respect to the inclusion of Distance to Default and risk ratings among the regressors.


Firm default Selection and growth dynamics Stochastic equality Bootstrap probit regressions Distance to Default Credit ratings 

JEL Classification

C14 C25 D20 G30 L11 


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Copyright information

© Springer-Verlag 2011

Authors and Affiliations

  • Giulio Bottazzi
    • 1
    Email author
  • Marco Grazzi
    • 1
  • Angelo Secchi
    • 2
  • Federico Tamagni
    • 1
  1. 1.LEMScuola Superiore Sant’AnnaPisaItaly
  2. 2.Università di PisaPisaItaly

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