Limited banks disintermediation, large recourse to short term debt and a relatively little amount of cash on balance sheet compared to short term debt are the most common features of SMEs’ financial structures. As a consequence, the financial profile of Italian SMEs remains generally weak and too much reliant upon the banking system to support the short and long term financial needs.
Not surprisingly, over the period under review (2006-2015), the changes in the funding strategies of Italian SMEs have been rather limited. In line with the historical evidence, bank debt remained largely predominant among financial liabilities, with a weight on total financial liabilities steadily above 85% and less than 6% of the companies analyzed diversified their capital structures with debt capital market instruments.
Albeit slowly increasing, the incidence of bonds on total financial liabilities is still very low, especially for the smaller companies included in the sample. At year-end 2015 bonds represented 4.1% of financial liabilities (or c. 1% of total liabilities) showing only a marginal improvement compared to the 3% observed in 2006. CRIF forecasts an increase of the bond penetration rate for Italian SMEs in 2016, with a bond to total financial liabilities ratio to reach 5%.
