Secondo a study published by the Bank of Italy signed (and under sole responsibility) by Tommaso Orlando and Giacomo Rodano (both of the Economic Structure Service, Economics and Law Division), despite the fact that the Covid-19 pandemic has had a significant impact on the Italian economy, with a drop in the GDP of the 8,9 percent in 2020, fewer bankruptcies occurred in 2020 than in 2019 and, more generally, market exits. This trend was also confirmed in 2021. It goes without saying that the suspension of bankruptcy proceedings. However, according to the study, the set of also played an important role measures to support enterprises adopted by governments.
The use of the various support measures was more intense in the productive sectors most affected by the economic shock following the Covid. We could therefore add that, in retrospect, a further unexpected outcome emerges, after that concerning employment: there were no massive recourses to layoffs, data for sure in numbers of real social emergency, by the trade union organizations. On the contrary, perhaps with an excessive existential connotation, the terminations of employment relationships, after the end of the block on economic dismissals, take place mainly through voluntary resignations of the most qualified workers and permanently included in the production processes. Furthermore, the difficulty of finding adequate labor is one of the handicaps affecting the recovery of production.
The study confirms – from the business side – substantial stability of the system, thanks also to the support interventions adopted during the crisis. The main result of the analysis is that the number of bankruptcies and market exits was lower in 2020 than in 2019, by 33 and 27 percent respectively. These decreases are particularly marked between March and June, when a moratorium on bankruptcy applications was in force. However, as evidence of a significant overall impact of public interventions to contrast the effects of the pandemic, also in 2021 – specifies the Note – the level of bankruptcies remained below that of 2019.
In 2020, in fact, the number of failed companies was significantly lower than in previous years; in fact, just under 7.400 companies have initiated bankruptcy liquidation proceedings, compared to almost 11.000 in 2019 (a drop of about a third). In addition to bankruptcy declarations, also the trend of bankruptcy applications decreased by about a quarter in 2020 compared to 2019. Companies exiting the market, also in 2020, decreased compared to 2019 by about 27 percent: from 70.000 to 50.000. Analyzing the monthly dynamics of declared bankruptcies, bankruptcy requests and exits from the market that took place since the first quarter of 2020, it can be seen that most of the decline is concentrated in the second quarter of the year, corresponding to the first months of the pandemic.
È the moratorium on bankruptcy applications, which remained in force until the end of June 2020, which partly explains the significant reduction, in this period, of requests and bankruptcies. In the months following the first lockdown, the number of bankruptcies and exits, although significantly increasing, generally remained below the levels of 2019. It is possible - according to the authors - that the blocking of bankruptcy applications until June 2020 contributed to the drop in bankruptcies also in the last two quarters of 2020: the application - clarifies the Note - when it gives rise to a bankruptcy declaration, typically precedes it by about four months. However, according to the authors, this effect is unlikely to last longer.
On the one hand, in the third quarter of 2020 we can already see a partial rebound in bankruptcy applications, which are growing compared to the same quarter of 2019, however returning in the last quarter of 2020 to a lower level than that referred to the previous year. On the other hand, given the limited duration of bankruptcy filings, it is unlikely that their suspension is a significant driver of the lower number of bankruptcies filed in 2021 compared to 2019. Based on the available data, in the first three quarters of 2021 the bankruptcies filed they are around 85 per cent of those observed in the corresponding quarters of 2019, bankruptcy filings are equal to 80 per cent and exits from the market at 75 per cent.
The analyzes conducted on previous episodes of negative economic cycle have estimated the instantaneous (in the same year) and deferred (in subsequent years) elasticity of the number of bankruptcies to changes in GDP. This has made it possible to develop some scenarios for the evolution of short-term bankruptcies, according to which, in the absence of government intervention, the number of bankruptcies in 2020 could have exceeded 12.000, almost 4.800 more than actually observed. This evidence justifies – according to the study – a significant impact of public measures of economic support to enterprises during the pandemic. To further explore the role of support measures, the study uses firm-level information to analyse: (1) whether the economic shock due to Covid has changed the composition of firms that have gone bankrupt and gone out of business compared to the period before the pandemic ; (2) how the use of support measures is associated with changes in bankruptcies and market exits.
There are no significant changes in terms of size composition, referred to the number of employees. As far as geographical location is concerned, only limited increases in the weight of companies in the North have been recorded on the total number of bankruptcies and exits. Among the bankruptcies, the share of companies based in central regions decreased slightly; among exits, the frequency of businesses located in the South decreased. Even the differences in the distribution between the productive activity sectors appear to be limited. For example, there is a decrease in the share of bankruptcies and exits in the commerce sector, against an increase in the other service sectors. However, no significant changes are observed - even if the opposite is perceived - in the weight of the sectors associated with tourism and recreational activities, among the most affected by the pandemic crisis.
Given the extent of the crisis, in the absence of government intervention - observes the Note - the share of companies that went bankrupt or exited the market would have increased in most productive sectors, especially in those most affected by the shock. However, their number has decreased. If government intervention had been evenly distributed among the different productive sectors, bankruptcies and market exits would have decreased less in the most affected sectors. Instead, the correlation at the manufacturing sector level between the reduction in the share of bankruptcies and market exits and the intensity of the Covid shock is almost nil.
Given the different intensity of the shock, it is plausible to believe that this is the consequence not only of the positive impact of the support measures, but also of the fact that their effect was proportional to the intensity of the shock itself. As for the measures adopted, the Note believes that there was an effective correlation between the intensity of the reduction in turnover in the first quarter of the pandemic and some of the main support measures, such as the moratorium on loans, which allowed SMEs to postpone the deadlines for payment of principal and interest on different types of debt agreements; the state guarantee, complete or partial depending on the amount, on loans; non-refundable grants, disbursed to companies that had reported a drop in revenues of more than a third.
