Debt and Financial Fragility: Italian Non-Financial Companies after the Pandemic

Bassam Fattouh (), Beniamino Pisicoli and Pasquale Scaramozzino
Additional contact information
Bassam Fattouh: SOAS University of London

No 551, CEIS Research Paper from Tor Vergata University, CEIS

Abstract: This paper analyses the evolution of debt of Italian firms from 2010 to 2020 with special focus on the first year of the Covid-19 pandemic. By means of quantile regressions, our approach investigates several heterogeneities to assess the vulnerabilities of the most fragile firms. We find that, on average, Italian non-financial companies (NFCs) reduced their indebtedness over the sample period, a trend which did not get interrupted during the first year of the pandemic. By exploiting the high heterogeneity in the data, however, we find that the turmoil affected the most indebted firms and the trend of declining indebtedness for these firms was reversed. Moreover, sectors that were suspended ex lege during the first lockdown: i) already had the highest levels of the debt-to-assets ratios over our sample period, and ii) experienced the steepest increase in debt in 2020 relative to the previous year. Finally, our results show that highly indebted firms exhibit a qualitative different behaviour compared to the rest of the sample and that excessively piling up debt severely increases the likelihood of exiting the market.

Keywords: leverage; corporate debt; debt ratio; quantile regression (search for similar items in EconPapers)
JEL-codes: G30 G31 G32 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2023-02-08, Revised 2023-02-08
New Economics Papers: this item is included in nep-ban and nep-cfn
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ceistorvergata.it/RePEc/rpaper/RP551.pdf Main text (application/pdf)

Related works:
Journal Article: Debt and financial fragility: Italian non-financial companies after the pandemic (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rtv:ceisrp:551

Ordering information: This working paper can be ordered from
CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
https://ceistorvergata.it

Access Statistics for this paper

More papers in CEIS Research Paper from Tor Vergata University, CEIS CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma. Contact information at EDIRC.
Bibliographic data for series maintained by Barbara Piazzi ().