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Borrowing Patterns, Bankruptcy and Voluntary Liquidation
C35 - Discrete Regression and Qualitative Choice Models
D22 - Firm Behavior; Empirical Analysis
G21 - Banks; Other Depository Institutions; Mortgages
G33 - Bankruptcy; Liquidation
We study the impact of financial variables upon bankruptcy and voluntary exit. Controlling for efficiency, which we find to decrease the odds of both bankruptcy and voluntary exit, characteristics of firms which correlate with the firms' access to funds, exert very different impacts upon the two modes of exit.Our findings support the idea that information asymmetries create cash constraints and that financial decisions are used to signal firms' quality and reduce the degree of information asymmetries between borrowers and lenders.