The Interdependences between Italian Firms’ Access to Finance and their Probability of Default

Claudiu Albulescu () and Serban Miclea
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Serban Miclea: Politehnica University of Timisoara, Romania

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Abstract: This paper addresses the interdependences between Italian firms’ access to finance and their probability of default, over the period 2005 to 2011. From a theoretical point of view, an increased default probability limits the firms’ access to bank loans. At the same time, a high indebtedness rate increases their risk of default. Therefore, in order to shed light on this nexus, we use a VAR specification and a large dataset including 143,000 Italian firms. We document a bidirectional causality between the bank loans to sales ratio and the Altman Z-score used as proxy for the probability of default. However, even if we find no clear evidence in the favour of the indebtedness effect or financing effect, we show that an increased probability of default does not limit the Italian firms’ access to bank loans, on the contrary.

Keywords: firms’ access to finance; probability of default; Z-score; causality; Italy (search for similar items in EconPapers)
Date: 2016
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