Why and how the Italian SMEs should be recapitalized after Covid-19? IL RISPARMIO, Volume 65, pp. 7-29.
The crisis triggered by the COVID-19 outbreak has caused a significant expansion of the bank debt of Italian SMEs, to some extent fostered by state guarantees. This intervention has made it possible to counter the economic impact of the pandemic, but on the medium-long term it may also hamper Italy’s economic recovery. In this paper, we propose a systemic intervention that catches the opportunities that arise from an innovative management of the current economic situation in order to: a) safeguard the Italian productive system implementing an industrial approach, rather than a purely financial approach; b) strengthen and restructure the Italian capital market for SMEs aiming at a structural rebalancing of the debt-equity ratio of Italian companies; c) reduce the possible contagion from a crisis in the real economy to financial system and public finance. We propose to establish a national fund of territorial and sectoral funds which should pursue the restructuring and recapitalization of firms by dip financing techniques. Such a scheme should be coordinated by government and financed by institutional and market operators. The proposed scheme would implement two important tasks: a) the conversion of bank loans (with or without government guarantees) to business facing crisis into equity or other subordinated financial instruments; b) support with additional capital and managerial skills to the turnaround processes of businesses joining the recapitalization and restructuring procedure.