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

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Main author: Fattouh, Bassam
Other authors: Pisicoli, Beniamino
Scaramozzino, Pasquale
Format: Journal Article           
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id eprints-41155
recordtype eprints
institution SOAS, University of London
collection SOAS Research Online
language English
language_search English
topic HG Finance
HJ Public Finance
description 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. We use quantile regressions to assess the vulnerabilities of the most indebted firms. On average Italian non-financial companies (NFCs) reduced their indebtedness over the sample period, a trend which continued 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 for which the trend of declining indebtedness was reversed. Moreover, sectors that were suspended during the first lockdown already had the highest levels of the debt-to-assets ratios, and experienced the steepest increase in debt in 2020. Finally, our results show that highly indebted firms exhibit a qualitatively different behaviour compared to the rest of the sample. Excessive debt build-up severely increases the likelihood of non-financial companies exiting the market.
format Journal Article
author Fattouh, Bassam
author_facet Fattouh, Bassam
Pisicoli, Beniamino
Scaramozzino, Pasquale
authorStr Fattouh, Bassam
author_letter Fattouh, Bassam
author2 Pisicoli, Beniamino
Scaramozzino, Pasquale
author2Str Pisicoli, Beniamino
Scaramozzino, Pasquale
title Debt and Financial Fragility: Italian Non-Financial Companies after the Pandemic
publisher Elsevier
publishDate 2024
url https://eprints.soas.ac.uk/41155/

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