The pandemic crisis in Italy: an assessment through a new classifier of firm economic-financial solidity

Our goal is to present a new classifier of economic-financial solidity (EFSI) of Italian firms, which can be used to assess the evolution of Italian firms’ economic and financial structure. In particular, considering profitability, solidity and liquidity (all evaluated in terms of their sustainability over time) we classify firms in four classes: Healthy, Fragile, At-risk, Highly at-risk. We find that in 2011–2020 a strengthening of economic and financial structure took place in the Italian business system, a trend that continued also during the pandemic year. To investigate this latter aspect, we consider the entry of firms into the EFSI Highly at-risk class (“downgrades”) in 2019–20. Using a matching technique, we run two exercises, comparing the downgrade rates in 2019–20 (Covid-19 crisis) versus 2011–12 (sovereign debt crisis) and successively versus 2018–19 (the last pre-pandemic year of economic growth), considering the firms with the same structural and economic characteristics in the two pairs of periods. Our results argue that, with respect to pre-Covid year, Governmental aid has limited the negative consequences of the pandemic especially on the smaller firms (those more severely hit by the crisis); with respect the 2011–12 crisis, in several sectors the support measures more than fully compensate for the negative effects of the pandemic, notwithstanding its stronger economic impact on GDP than the previous crisis episode.