The Financing of Italian Firms and the Credit Crunch: Findings and Exit Strategies

The aim of the paper is to analyse how the credit crunch has modified the traditional bank-firm relationship with a particular focus on the Italian situation. Our analysis reinforces the finding that in Italy, the credit available to the real economy is insufficient in terms not only of quantity but also of quality. The next step is to identify and discuss possible exit strategies for eliminating the credit crunch and overcoming serious intrinsic shortcomings in terms of alternative instruments, markets and intermediaries. In fact, while on the one hand the crisis has revealed the underdevelopment of the Italian financial market, the insufficient role of institutional investors, the embryonic state of the corporate bond markets and the virtual non-existence of commercial paper markets, on the other hand it could finally provide the opportunity for the development of these channels. The changing role of banks in the new scenario is also analysed as well as the characteristics firms will require to benefit from it