An Essay on Effect of Working Capital Financing on Firm Performance

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Aziminia, Hamid Reza | 2019

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Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 52507 (44)
University: Sharif University of Technology
Department: Management and Economics
Advisor(s): Madanizadeh, Ali; Mahmoudzadeh Ahmadinejad, Amineh
Abstract:
This study examines the effect of working capital financing on the performance of Iranian manufacturing establishments in the credit crunch of 1387 (2008). The identification strategy for this study is comparison of ex-ante features and ex-post performance using instrumental variable (IV) regression. This IV regression, by controlling other determinants of dependence on working capital (domestic demand, exports and imports) and considering credit crunch indicator, can provide an unbiased and consistent estimation impact of working capital channel in credit crunch. This study uses a sample from "Annual Survey of Iranian Manufacturing Establishments" that includes 95512 observations and 28859 manufacturing Establishments in 1382-1387. Results show that the credit crunch of 1387 negatively and significantly reduced the average performance of manufacturing establishments through working capital channel. This result is not sensitive to change indexation or control variables
Keywords:
Working Capital Management ; Financial Constraint ; Manufacturing Firms ; Credit Crunch

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