3 business Recently, the Bank of Italy has so 'assessed the impact of Basel on Three Companies:
Reflections on corporate financing The effects of reform on the Italian production system can be varied.
companies more indebted to the banking system could suffer from the impacts of a tightening of credit policies.
Given the characteristics of the Italian entrepreneurial, my analysis will focus on smaller firms, for the significant role they play in our economy and the less bargaining power it may have against the banks. In fact, the budgets of these companies have several aspects that make them potentially vulnerable to any tightening in credit supply conditions
. The data of the Central
the budgets of a sample of 50,000 firms indicate that those with fewer than 50 employees have a financial structure is fragile and relatively high exposure to the banking system. In particular, the degree of indebtedness of small businesses are
significantly higher than that of larger firms, even controlling for other characteristics such as geographical area or economic sector they belong to.
Between 2005 and 2008 the ratio of financial debt to the sum with the same result on average equity of 58.3 percent, about two percentage points higher than the medium-sized companies and more than 10 points compared to large. The increasing indebtedness of small businesses is reflected in a more limited capacity to bear the financial costs, which represent over 30 per cent of gross operating margin
against values \u200b\u200bbetween 20 and 25 per cent for most companies large. The major weakness is concentrated in the construction industry and service sectors.
Because of the substantial absence of alternative funding channels to finance, the dependence of small firms by banks is higher than the average: the proportion of bank debt to total debt is 83 percent, this value is close to that recorded for the medium-sized businesses, is higher than at large about 30 percentage points.
These elements of weakness in the financial structure of small businesses, which could adversely affect the conditions of access to credit in the aftermath of the entry into force of new rules for banks, are not sufficient to establish a complete picture of possible effects of the reform. It must be properly considered several factors that might mitigate the impact on these companies
.
First, we can estimate that companies with fewer than 20 employees are funded to a lesser extent by the largest and most complex banks that will suffer the greatest impact of the reform. The share of credit extended by these intermediaries to small businesses is approximately 45 per cent, compared with a value close to 53 percent for medium-large enterprises.
addition, but this is perhaps the most significant factor must be considered that a good number of Italian banks' medium and small size is already characterized by low levels of wealth higher than those required by the new rules. These intermediaries have been able to secure even during the crisis
a sustained flow of credit to the economy. It is likely that small businesses can continue to benefit from the dynamism of these banks, which are a natural partner especially for their local roots and strong ability to incorporate in the credit process qualitative information on the credit score.
should also be noted that the new regulatory system confirms fully the mechanisms provided by Basel 2 for containing the absorption of capital loans to small and medium-sized enterprises. At the same credit, loans to small and medium-sized enterprises undertake a number of assets significantly less than that required in respect of loans to larger firms.
Finally, as I have consistently underlined, with the phasing in the new rules come into force will also include the impact on the real economy. More details on
www.basileatre.eu
