Geographical proximity, nonlinearities and financial behaviour of firms. Does firm size matter?

  1. Mari Luz Maté Sánchez de Val
  2. Fernando Antonio López Hernández
  3. Jesús Mur Lacambra
  4. Majed Atwi Saab
Aestimatio: The IEB International Journal of Finance

ISSN: 2173-0164

Year of publication: 2018

Issue: 17

Pages: 26-53

Type: Article

More publications in: Aestimatio: The IEB International Journal of Finance


Índice Dialnet de Revistas

  • Year 2018
  • Journal Impact: 0.160
  • Field: ECONOMÍA Quartile: C3 Rank in field: 75/171


  • Social Sciences: C


The paper highlights the role played by nonlinearities and geographical proximity in an attempt to better understand the financial behaviour of firms. Our study focuses on three main financial dimensions: profitability, indebtedness and liquidity. A classical partial adjustment model is specified in order to capture the movements produced in each dimension. Using a large sample of Spanish industrial companies, located along the Mediterranean Basin, we evaluate the impact of nonlinearities, the heterogeneous behaviour of companies, and the importance of local networks. The impact of physical proximity is greater for small firms, which are more dependent on what happens in their neighbourhood. Moreover, the impacts are not homogeneous for the three financial ratios: we find that the effect of proximity is stronger for the profitability ratio than for indebtedness and liquidity.

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