THE EFFICIENCY OF ITALIAN BANKRUPTCY PROCEDURES: AN EMPIRICAL ANALYSIS

The importance of efficient bankruptcy procedures is widely recognized and the consciousness of the possible costs due to inefficient procedures has induced several European countries to introduce reforms of their systems in order to improve the efficiency. The early Italian bankruptcy act was promulgated in 1942; its main goal was the punishment of the inefficient debtor and the protection of interests of creditors. In this context, the interests of the debtor were not taken into account and the creditors were merely participants in a compulsory proceeding in which they played a marginal role. Recently, the Italian bankruptcy act was modified in order to avoid inopportune liquidation of firms, trying to safeguard the value of firms, and to reduce time of liquidation as well as costs of bankruptcy procedures. The focus of the paper is the analysis of ex post and ex ante efficiency of the Italian bankruptcy procedures. The analysis of ex post efficiency is based on official statistical data annually published by the ISTAT (the Italian Office of Statistics), investigating: direct and indirect costs of bankruptcy procedures; average ratio of claims reimbursed to the creditors; length of bankruptcy procedures. The period investigated is 2000-2007. The analysis of ex ante efficiency is based on two non-paired samples of failed and non-failed firms, investigating their financial statements of 2003-2008. The main expected result is that the Italian bankruptcy procedures are not efficient both in an ex post and in ex ante perspectives.