Page 75 - Contributed Paper Session (CPS) - Volume 4

CPS2129 Matilde Bini et al.

Longitudinal analysis of financial ratios and
economic indicators of Italian firms in the period
2008-2017
1
2
Matilde Bini , Lucio Masserini , Alessandro Zeli 3
1 Department of Human Sciences, European University of Rome
2 Department of Economics and Management, University of Pisa
3 Division for data analysis and economic, social and environmental research, ISTAT

Abstract
The Great Recession derived from USA subprime crisis involved the European
countries in two different steps: in the first phase the finance contraction and
the bank failures spread out across the whole Atlantic area involving, above
all, the financial market but also influencing the real economy. The second
phase involves in depth the Euro zone and sovereign debts of the Countries
until 2015. Also for Italy, the crisis period was from 2008 to 2011 characterized
by a deep negative conjuncture until 2009 and by a slight recovery until the
first half of 2011, and from 2011 to 2015, characterized by an intense recession.
The aim of this work is to collect evidence on the Italian manufacturing system
with the following goals: to calculate the main financial ratios related to firms’
riskiness and distress risk trend by means of the book-value data; to detect
the guide-variables outlining the firms’ riskiness and distress risk trend in the
period 2008-2017 to investigate the riskiness-distress risk trend for
manufacturing industries and try to understand the effects of the Great
Recession on this important business indicator trend. To perform this analysis
a Latent Growth Curve Model is proposed, using an important Italian private
database containing the book-value data of the joint-stock company Italian
firms.

Keywords
Firms’ riskiness; Latent Growth Curve Model; Longitudinal model; Panel data

1. Introduction
The Great Recession derived from USA subprime crisis involved the
European countries in two different steps: in the first phase the finance
contraction and the bank failures spread out across the whole Atlantic area
involving, above all, the financial market but also influencing the real economy.
The second phase, after the temporary recovery in 2010, involves more and
more in depth the Euro zone and sovereign debts of the Countries in that area
and it lasted at least until 2015. Also for Italy, the crisis period from 2007 to
2014 can be divided in two sub-periods: the first, from 2008 to 2011, is
characterized by a deep negative conjuncture until 2009 and by a slight
recovery until the first half of 2011, the second, characterized by an intense

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