The official site of Italy's central bank

No. 162 - Micro-enterprises in Italy: a first analysis of economic and financial conditions

Italy is the European country where firms with fewer than 10 employees account for the largest share of value added and employment. On the basis of data from the company balance sheets and the Central Credit Register during the period 2003-2010, this work contributes to the analysis of these companies describing their economic and financial conditions and their relations with banks based on a sample of about 500,000 companies, of which more than 400,000 are classified as micro-enterprises. On average, they have lower profitability and higher debt, largely bank debt, than the other size classes. The proportion of loans made by the partners and shareholders is significant, a feature that can mitigate some of the risks associated with their weaker financial conditions. Econometric estimates indicate that micro-enterprises must provide more guarantees and pay higher rates of interest. In all aspects investigated in our work, the heterogeneity of micro-enterprises is much higher than for the other size classes, which suggests broad scope for future research.