The Debt of Italian Non-Financial Firms: An International Comparison

39 Pages Posted: 8 Apr 2016

Date Written: February 25, 2016

Abstract

In the run-up to the financial crisis Italian firms significantly increased their debt in absolute terms and in relation to equity and GDP. The positive gap in firms’ leverage between Italy and other euro-area countries has widened in recent years, despite the outstanding debt of Italian firms has decreased since 2011. In this work we document the magnitude of this gap using both aggregate macro data and firm-level information. We find that, controlling for several firm-specific characteristics (i.e. age, profitability, asset tangibility, asset liquidity, turnover growth), the leverage of Italian firms is about 10 percentage points higher than in other euro area countries. Differences are systematically larger among micro and small firms, whereas they are small and weakly significant for firms with assets above 300 million euros.

Keywords: leverage, financial structure, euro area

JEL Classification: G32

Suggested Citation

De Socio, Antonio and Finaldi Russo, Paolo, The Debt of Italian Non-Financial Firms: An International Comparison (February 25, 2016). Bank of Italy Occasional Paper No. 308, Available at SSRN: https://ssrn.com/abstract=2759873 or http://dx.doi.org/10.2139/ssrn.2759873

Antonio De Socio (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Paolo Finaldi Russo

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

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