The article entitled 'The effects of the COVID-19 shock on corporates' liquidity needs, balance sheets and riskiness', written by researchers from the Bank of Italy, is now online.
The recession triggered by the COVID-19 pandemic has significantly increased the share of Italian limited companies that are expected to register a liquidity shortfall and a capital deficit in 2020. The main support measures adopted by the Government between March and August have strongly mitigated these effects by essentially closing the greater liquidity gap and slowing, though not halting, the deterioration in capitalization. Taking out new loans, also thanks to the public guarantees available, nevertheless further increases indebtedness, especially for riskier firms. The resulting weakening of balance sheets raises firms' probability of default.