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2017, vol. 64, iss. 4, pp. 383-400
Which institutions are important for firms performance?: Evidence from Bayesian model averaging analysis
aHenan University in Kaifeng, China + Zeppelin University in Friedrichshafen, Germany + Charles University in Prague, Institute of Economic Studies, Prague, Czech Republic + Kaunas University of Technology, Kaunas, Lithuania
bMendel University in Brno, Czech Republic + Kaunas University of Technology, Kaunas, Lithuania
cZeppelin University in Friedrichshafen, Germany,,
Project of the Research Council of Lithuania, No. MIP-016/2015
Project of the Czech Science Foundationvia, No. P403/14-28848S: Financial Crisis, Depreciation andCredit Crunch in CEECs

Keywords: institutional quality; insolvency; inefficient firms; Bayesian model averaging
Using a rich dataset on individual firms in selected EU countries between 2005 and 2012, we document a surprisingly high share of assets tied in highly inefficient firms. Moreover, we discuss different channels through which institutions may affect firm financial developments and thus the long-run growth. Using Bayesian model averaging analysis, we discuss the importance of different types of economic, financial and political institutions. We show that high institutional quality improves the financial conditions of firms. However, too lax business regulations may worsen firms' performance possibly due to excessive risk taking behavior.
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article language: English
document type: Original Scientific Paper
DOI: 10.2298/PAN151015031F
published in SCIndeks: 21/12/2017
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