I have panel data of 2028 obseravtions (156 companies for 13 years). My dependent variable is binary (distressed being 0, non-distressed being 1). I got 438 observations out 2028 as distressed for which I need a matching sample of 438 non-distressed observations from remaining 1590 observations.

My question is how can I match the distressed observations with those of non-distressed observations. Can I use Propensity Score Matching (PSM) method? If yes, is it possible to apply PSM on dependent variable? If yes, how? I am stuck in matching these observations. I need your kind help.

Regards,
Muqaddas Khalid.