by Giuseppe Varvaro
The eye of the Istat annual report, presented to Montecitorio on 15 May 2024, sees the Italian thirst for corporate investments, but not the shortcomings of the economic dynamics to finance them. The analysis (pp. 38,60) finds over the last 24 years the scarcity of investments by Italian companies in the intangible assets sector compared to the three large economies of France, Germany and Spain. And yet the current national crisis of the vital link between investment and financial policies does not emerge. More and more banks – in their €600 billion loans to businesses, including for investments – raise doubts on the company’s ability to support credit operations and impose more stringent conditions on loans, or not at all.
In Italy, bank financing, compared to that of the stock market, is crucial – as a 2010 Unicredit report noted – for the numerous small businesses, given their characteristics of greater information opacity and relatively higher risk of bankruptcy. Currently the contraction trend in the stock of bank loans to businesses it was brought, on an annual basis, to March 2024 a -4.6%, while last July it was -5.7%. Such data processed in the monitoring of An undertaking a few days ago they pushed the same trade confederation to call for support measures.
This while in terms of the quality of the business environment, GEM 2023/24 has just assigned the low score of 3.9 (on a scale of 1 to 10), within the NECI composite index (of 4.5). The statistics highlight lights and shadows between expected and realized investments. In the recent EY-SWG 2024 survey, the majority of companies express their intention to invest in the next two years, in the wake of the ISTAT 2022 report, in which they expressed a growing strategic evaluation towards intangible investments (R&D, etc…).
Nonetheless, on a concrete level, according to the last Istat 2023 report, Italian companies have increased investments in R&D, in response to support policies with an increase in tax incentives, but at the same time fixed investments per worker in manufacturing have slowed down, in the absence of tax incentives. Foreign research on the topic of corporate and financial policies has investigated the crucial role of accounting practice. The sensitivity of the system was thus made evident credit market to company financial statements aligned with the accounting principles of the international financial reporting standard, IFRS, imposed by EU directives for certain companies.
Simmer di Lima, Franco de Lima and Gotti, in Effects of the Adoption of IFRS on the Credit Market, associated the benefits of IFRS with: lower cost of credit, longer maturity, larger loans, lower demand for collateral. The adoption of IFRS implies information quality and comparability. The latter – according to Singleton-Green, in The effects of mandatory IFRS adoption in the EU -, on the one hand, reduces costs, times and asymmetries of access to information, uncertainty and risk for those who finance, and, on the other, increases evaluation of opportunities, market liquidity, attractiveness of foreign financiers.
Bertrand, Brebisson and Buriet – following their investigation Why choosing IFRS? Benefits of voluntary adoption – they concluded that voluntary adoption of IFRS helps private companies reduce their opacity, and therefore access to debt increases. Can it also be said that the horizon of the country’s economic changes can be seen in the structure of company balance sheets?
