Abstract
The financial fragility hypothesis and the debt crisis in Italy in the 2010s
Highlights
As is known, recently the Great Recession – the largest global economic crisis after the Great Depression – took place
If we compare the results obtained according to the methodology of Torres Filho et al, Nishi and Mulligan, we can make an unequivocal conclusion about the fragility of the non-financial sector of the Italian economy in the period after the 2011 crisis, which confirms our hypothesis
According to the FFH, periods of stability are followed by periods of crisis due to changes in the financial behavior of economic units
Summary
Recently the Great Recession – the largest global economic crisis after the Great Depression – took place. Speculative and Ponzi financial positions, the authors created an index of financial fragility, which we use below Based on it, they analyzed the debt crisis in Brazil with the help of the FFH. The authors stressed that austerity policies did not improve the financial situation in Greece (Argitis, Nikolaidi, 2014: 277) These were some of the main empirical studies analyzing the classifications of hedge, speculative and Ponzi financial structures in the public sector. The first of these studies devotes to the debt crisis in Brazil from 2007 to 2015 and is based on the methodology that was proposed in the work (Davis et al, 2017) The authors refined this methodology and developed their own index of financial fragility. The authors used the Interest Coverage Ratio, which can be defined as the ability of a company to cover its debts:
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