Publication: Overdraft Facility Policy and Firm Performance : An Empirical Analysis in Eastern European Union Industrial Firms
Loading...
Published
2012-06
ISSN
Date
2012-06-29
Author(s)
Castillo, Leopoldo Laborda
Editor(s)
Abstract
This article evaluates the effect of the overdraft facility (or line of credit) policy by comparing a large sample of overdraft facilitated firms and matched non-overdraft facilitated firms from Eastern Europe at the sector level. The sample firms are compared with respect to rates of different performance indicators including: technical efficiency (a Data Envelopment Analysis approach is applied to estimate the technical efficiency level for individual sectors), production workers trained, expenditures on research and development, and export activity. In order to avoid the selectivity problem, propensity score matching methodologies are adopted. The results suggest that a certain level of overdraft facility provided to firms would be needed to stimulate investment in research and development, which will eventually result in increased growth in productivity.
Link to Data Set
Citation
“Castillo, Leopoldo Laborda; Guasch, Jose Luis. 2012. Overdraft Facility Policy and Firm Performance : An Empirical Analysis in Eastern European Union Industrial Firms. Policy Research Working Paper; No. 6101. © World Bank. http://hdl.handle.net/10986/9319 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Publication Climate and Social Sustainability in Fragility, Conflict, and Violence Contexts(Washington, DC: World Bank, 2026-01-07)Climate change is widely recognized as a driver of violent conflict, but its broader social effects remain less understood. Ignoring these dimensions risks a vicious cycle where climate policies might undermine socially just adaptation. Evidence is still limited on how climate shocks influence political participation, trust, or migration. This paper helps fill that gap by examining links between climate change, conflict, and social sustainability, with a focus on inclusion, resilience, cohesion, and legitimacy. Using secondary data from 2019–24, the study applies simple correlation-based methods to test three hypotheses on the nature, severity, and composition of these associations. The analysis combines multiple climate impact measures, new conflict classifications, recent social sustainability frameworks, and controls for population and geography. The results reveal strong correlations—not causation—between climate events and contexts of fragility, conflict, and violence. Climate impacts are most pronounced in both national and subnational conflict settings. The study also finds robust links between fragility, conflict, and violence and low levels of social sustainability, reflecting its role as both a driver and consequence of conflict. Some dimensions—such as violent events and insecurity—appear weaker in areas most affected by climate shocks. Two of the hypotheses are supported, and one remains inconclusive.Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication Institutional Capacity for Policy Implementation: An Analytical Framework(Washington, DC: World Bank, 2026-01-07)State capacity is an important prerequisite for policy implementation, yet at the country level it is difficult to measure, assess, and reform. This paper proposes a focus on institutional capacity: the ability of public institutions to implement the specific policy mandates for which they are responsible. Based on a review of existing literature, the paper defines the different dimensions that compose institutional capacity and groups them into two cross-cutting categories: organizational dimensions (personnel, financial resources, information systems, and management practices) and governance dimensions (transparency, independence, and accountability). The paper proposes measures for organizational and governance dimensions using existing data, shows intra-institutional variation of these measures within countries, and discusses how new data could be collected for better measurement of these concepts. Finally, the paper illustrates how the framework can be used to diagnose the sources of common problems related to weak policy implementation.Publication South Africa’s Fragmented Cities: The Unequal Burden of Labor Market Frictions(Washington, DC: World Bank, 2026-01-08)Using high-resolution administrative, census, and satellite data, this paper shows that South African cities are characterized by spatial mismatches between where people live and where jobs are located, relative to 20 global peers. Areas within 5 kilometers of commercial centers have 9,300 fewer residents per square kilometer than expected, which is 60 percent below the global median. Poor, dense neighborhoods are most affected. In Johannesburg, a 10-percentile increase in distance from the nearest business hub corresponds to a 3.7-percentile drop in asset wealth (a proxy of household wellbeing) and 4.9-percentile drop in employment. In Cape Town, the declines are 4.0 and 3.7 percentiles, respectively. Employment is 87 percent lower in the poorest decile than the richest in Johannesburg and 61 percent lower in Cape Town. These findings suggest that South Africa’s spatial organization of people and economic activity constrains agglomeration and reinforces inequality. This methodology provides a scalable and standardized data-driven framework to analyze spatial accessibility and agglomeration frictions in complex, data-constrained urban systems.Publication Investment in Emerging and Developing Economies(Washington, DC: World Bank, 2026-01-07)The world faces a pressing challenge to meet key development objectives amid slowing growth and rising macroeconomic and geopolitical risks. With the number of job seekers rising rapidly, infrastructure shortfalls continuing to be large, and climate costs mounting, the case for a significant investment push has never been stronger. Yet the capacity to respond in many emerging markets and developing economies has eroded. Since the global financial crisis, investment growth has slowed to about half its pace in the 2000s, with both public and private investment weakening. Foreign direct investment inflows—a critical source of capital, technology, and managerial know-how—have also fallen sharply and become increasingly concentrated, leaving low-income countries with only a marginal share. The risks of further retrenchment are significant, as trade tensions, policy uncertainty, and elevated debt levels continue to weigh on investment. Reigniting momentum will require ambitious domestic reforms to strengthen institutions, rebuild macro-fiscal stability, and deepen trade and investment integration—the foundations of a supportive business climate. At the same time, international cooperation is indispensable. A renewed commitment to a predictable system of cross-border trade and investment flows, combined with scaled-up financial support and sustained technical assistance, is essential to help emerging markets and developing economies—especially low-income countries and economies in fragile and conflict situations—bridge financing gaps and implement the domestic reforms needed to restore investment as an engine of growth, jobs, and development.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Market Facilitation by Local Government and Firm Efficiency : Evidence from China(World Bank, Washington, DC, 2013-11)This paper uses data from a large survey of Chinese firms to investigate whether local government efforts to facilitate market development improve firm efficiency. Both government provision of information about products, markets, and innovation and government assistance in arranging loans are positively associated with firm efficiency. Those private firms with weak access to and knowledge of financial, input, and product markets benefit most from such assistance. These patterns are robust across multiple estimation approaches. Case studies of specific types of market facilitation by local governments are provided. The evidence is consistent with the notion that government facilitation can help some firms overcome market failures in the early stages of development. The paper argues that changing fiscal dynamics that forced local governments to become increasingly self-reliant in generating revenue and a government promotion system based on local economic performance compelled these efforts at market facilitation.Publication Scaling-Up SME Access to Financial Services in the Developing World(Washington, DC, 2010-10)Small and medium enterprises (SMEs) play a major role in economic development, particularly in emerging countries. Access to finance remains a key constraint to SME development in emerging economies. Closing the credit gap for formal SMEs will be less daunting than for informal SMEs. The SME finance gap is the result of a mismatch between the needs of the small firms and the supply of financial services, which typically are easier for larger firms to access. Deficiencies in the enabling environment and residual market failures have motivated government interventions to foster SME access to financing. The stocktaking exercise confirms the rise in various parts of the world of specific business models aimed at providing financial services to SMEs in a cost-effective manner. Effective SME financing models can be implemented in different country and market environments, but greater outreach is achieved in the most developed environments for the financial sector. Although SME banking and microfinance models are successfully being rolled out in an increasing number of countries and regions, equity financing remains a challenge in developing economies. The role of international finance institutions (IFIs) and development finance institutions (DFIs) to foster SME financing in the developing world has been significant so far. Increasing access to finance can only be successful if qualitative aspects are taken into account.Publication Scaling-Up SME Access to Financial Services(Washington, DC, 2010-11)Small and Medium Enterprises (SMEs) play a major role in economic development, particularly in emerging countries, but access to finance remains a key constraint to SME. In the light of the new understanding of the SME finance challenges that this report synthesizes, the Financial Inclusion Experts Group (FIEG) makes key recommendations for the G-20 leaders, in order to achieve a global scale-up of SME access to financial services in the developing world. The G-20 FIEG SME Finance Sub-Group executed a global SME Finance stocktaking exercise with various SME finance models to establish best practices in SME Finance.The report concludes that, given the fragmented SME finance data space, the G-20 has a unique opportunity to lead the collaborative effort on improving the availability and quality of SME finance data globally. This can be achieved through encouraging and coordinating the data collection efforts at regional, national, and global levels conducted by a multitude of sources including national governments/agencies and international organizations and effectively addressing the data collection challenges along the way to ensure continuity of these efforts moving forward.Publication External Finance and Firm Survival in the Aftermath of the Crisis : Evidence from Eastern Europe and Central Asia(World Bank, Washington, DC, 2012-04)Two data sets are used to study how country and firm characteristics affected firms' financial constraints and their likelihood of survival during the early phase of the recent global financial crisis in Eastern Europe and Central Asia, a region that was especially hard hit. The first data source provides information on the reported severity of financial constraints for 360 firms from 23 countries in 2002, 2005, and 2008. By following the same firms over time, the study summarizes both the gradual easing of financial constraints from 2002 to 2005 and their tightening during the crisis. Key findings are that financial constraints during the crisis were less severe in countries with well-established foreign banks (entered prior to year 2000), and that changes in the severity of financial constraints were more pronounced for large firms than others during the crisis (although large firms continued to have less severe constraints on average). The second data source provides information on whether firms remained in operation in 2009 in six countries in Eastern Europe and Central Asia. Controlling for other relevant characteristics, firms were more likely to survive the crisis if they had access to external credit.Publication Sierra Leone : Investment Climate Policy Note(Washington, DC, 2009-06)This Investment Climate Policy Note (ICPN) for Sierra Leone evaluates the country's business environment by: (i) analyzing barriers to private sector investment and growth and how they vary among different types of firms; (ii) benchmarking Sierra Leone's investment climate and firm performance to that of other countries; and (iii) providing recommendations to promote and strengthen the private sector. The ICPN is supported by the statistical analysis of a 2009 enterprise survey of 150 formal, manufacturing and service firms with five or more employees based in Western Area/Freetown and Kenema, two of Sierra Leone's major urban centers. The ICPN is organized as follows. Chapter one provides context for Sierra Leone's business environment. Chapter two discusses the performance of Sierra Leone firms, with a focus on labor productivity. Chapter three examines how investment climate constraints cost businesses money and time, discusses main bottlenecks to conducting business as identified by managers of Sierra Leone firms, and reviews obstacles related to electricity supply, tax rates, informality, corruption and access to land. Chapter four analyzes data on how firms access and use finance, and chapter five discusses exports and internationalization in Sierra Leone. Chapter six concludes and provides policy options to improve the investment climate.
Users also downloaded
Showing related downloaded files
Publication Groundswell Africa(World Bank, Washington, DC, 2021-10-18)Uganda is a diverse and verdant country. From the tall volcanic mountains along the eastern and western borders to the densely forested wetlands of the Albert Nile River and the rainforests in the center of the country, it encompasses many different ecosystems. Kampala, the capital city, is built around seven hills not far from the shores of Lake Victoria. These varying landscapes provide Ugandans with ample resources to capitalize on tourism and cultivate crops, including Ugandan coffee, which has become a favorite of coffee drinkers around the world. These rich and beautiful landscapes, however, are under threat from climate change, which could have disastrous effects for Ugandans. This report shows that by 2050, as many as 12 million people, or 11 percent of the population could move within Uganda because of slow onset climate factors, without concrete climate and development action. Immediate, rapid, and aggressive action on the cutting down emissions as a global community and pursuing inclusive resilient development at the national level could bring down this scale of climate migration by about 35 per cent. Contextualizing the results from an innovative climate migration model applied to Lake Victoria Basin countries, it finds that such climate-induced migration, if unattended, may deepen existing vulnerabilities across the country, potentially leading to greater poverty, fragility, and conflict. As lives, livelihoods, and the economy are integrally linked to the environment, addressing climate change is an imperative for Uganda. Adopting inclusive development policies that reduce greenhouse gas emissions and integrate climate resilience could decrease the number of internal migrants significantly. Acting early and focusing on improved management of forest and other landscapes, developing local job opportunities, and providing basic services for both host communities and refugees will be important to help these communities survive and thrive in a changing climate. The right mix of policies would also encourage the ingenuity and energy of Uganda’s youthful population, which is projected to almost triple by 2050.Publication Commodity Markets Outlook, October 2023(Washington, DC: World Bank, 2023-10-30)The conflict in the Middle East—the latest of an extraordinary series of shocks in recent years—has heightened geopolitical risks for commodity markets, in an already uncertain global environment. Before the conflict began, voluntary oil supply withdrawals by OPEC+ producers pushed energy prices up 9 percent in the third quarter. As a result, the World Bank’s commodity price index rose 5 percent over that period and is now 45 percent above its 2015-19 average. For now, the war’s impact on commodity prices have been muted. Prices of oil and gold have risen moderately, but most other commodity prices have remained relatively stable. Nevertheless, history suggests that an escalation of the conflict represents a major risk that could lead to surging prices of oil and other commodities. A Special Focus section provides a preliminary assessment of the potential impact of the conflict on commodity prices. It finds that the effects of the conflict are likely to be limited, assuming the conflict does not widen. Under that assumption, the baseline forecast calls for commodity prices to decline slightly over the next two years. If the conflict does escalate, the assessment also includes what might happen under three risk scenarios, relying upon historical precedents to estimate the effects of small, moderate, and large disruptions to the global oil supply. The magnitude of the effects will depend on the duration and scale of the supply disruptions.Publication Ecosystem Services and Green Growth(2012-10)"Ecosystem services" has become a catch-phrase for the complex connections between the natural environment and human well-being. This paper considers the impact of changes in the supply of ecosystem services, and programs to increase their supply, on near-term growth of gross domestic product. It focuses on the relationship between locally generated versus transboundary services and growth in developing countries, where the highest rates of ecosystem degradation tend to be found. There is a common perception that there is a tradeoff between environmental protection and economic growth, especially in the near term. This perception can make policymakers reluctant to support environmental protection. Where the environment is a source of economically important services, then environmental protection may stimulate growth of gross domestic product instead of reducing it. The paper considers evidence on the economic value of regulating services; the degree to which ecosystems actually supply some of the services they are commonly assumed to supply; and the near-term growth implications of restoring ecosystems, and reducing their loss. This leads to a discussion on the effectiveness of programs intended to reduce ecosystem loss, with a focus on protected areas and payments for ecosystem services, and the effects of these programs on poverty alleviation.Publication What Matters Most for Student Assessment Systems : A Framework Paper(World Bank, Washington, DC, 2012-04)The purpose of this paper is to provide an overview of what matters most for building a more effective student assessment system. The focus is on systems for assessing student learning and achievement at the primary and secondary levels. The paper extracts principles and guidelines from countries' experiences, professional testing standards, and the current research base. The goal is to provide national policy makers, education ministry officials, development organization staff, and other stakeholders with a framework and key indicators for diagnosis, discussion, and consensus building around how to construct a sound and sustainable student assessment system that will support improved education quality and learning for all.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.