Investment and Investment Financing in Italy: Some Evidence at the Macro Level

Abstract

We analyse the developments of investment and investment financing in Italy since 1995, based on data from national accounts and the flow of funds. The exceptional fall in investment after the global financial crisis in 2007 concerned all institutional sectors and asset categories. However, appropriately deflated data highlight the more intense fall of household capital expenditure. Consistently, on the asset side, construction was one of the most hard-hit capital goods; ICT and intangible investment instead weathered the double recession better. Focusing on investment financing, the eruption of the crisis caused a major contraction in the availability of external finance for non-financial corporations and households. Long-term loans to non-financial corporations became more important, crowding out their short-term counterparts. Also the weight of debt securities increased significantly, especially after 2008.

Credit Demand and Supply: A Two-Way Feedback Relation

“…The drop in economic activity has mainly a¤ected the investment component. As highlighted by Giordano, Marinucci and Silvestrini (2016), Italy experienced a large fall in gross …xed capital formation, both in the global …nancial crisis and the sovereign debt crisis. Total real investment su¤ered a loss of around 30 per cent since the pre-crisis peak in 2007, reverting to its lowest level since the mid-1990s.…”

Forecasting Corporate Capital Accumulation in Italy: The Role of Survey-Based Information

“…Several studies (Bontempi et al, 2010;Busetti et al, 2016;Bacchini et al, 2018;Giordano et al, 2019) have focused specifically on Italy, an insightful case-study in that, after growing at a comparable rate to its peer euro-area economies since 1995 (the initial year of official national account data), Italy's GFCF then experienced a significantly more pronounced downturn during the double recession and a more sluggish recovery thereafter. In this country, non-financial corporations (which we loosely also refer to as "firms" in this article) alone undertake about half of total GFCF (Giordano et al, 2016).…”

Assessing the usefulness of survey‐based data in forecasting firms' capital formation: Evidence from Italy

“…Several studies (Bontempi et al, 2010; Busetti et al, 2016; Bacchini et al, 2018; Giordano et al, 2019) have focused specifically on Italy, an insightful case study in that, after growing at a comparable rate to its peer euro area economies since 1995 (the initial year of official national account data), Italy's investment (as measured by gross fixed capital formation, GFCF, in national accounts) then experienced a significantly more pronounced downturn during the double recession and a more sluggish recovery thereafter. In this country, nonfinancial corporations (which we loosely also refer to as “firms” in this article) alone undertake about half of total GFCF (Giordano et al, 2016). Italian firms' real investment rate dropped from over 24% at the beginning of 2007 to a trough of about 19% at the end of 2013 (Figure 1); since then, it started to pick up again but has still not reached the precrisis peak.…”