Financial fragility, trade credit and contagion effects during the crisis: a spatial econometric approach to firm-level data

The number of distressed manufacturing firms increased sharply during recessionary phase 2009-13. Financial indebtness traditionally plays a key role in assessing firm solvency but contagion effects that originate from the supply chain are usually neglected in literature. Firm interconnections, captured via the trade credit channel, represent a primary vehicle of individual shocks’ propagation, especially during an economic downturn, when liquidity tensions arise. A representative sample of 11,920 Italian manufacturing firms is considered to model a two-step econometric design, where chain reactions in terms of trade credit accumulation (i.e. default of payments to suppliers) are primarily analyzed by resorting to a spatial autoregressive approach (SAR). Spatial interactions are modeled based on a unique dataset of firm-to-firm transactions registered before the outbreak of the crisis. The second step in instead a binary outcome model where trade credit chains are considered together with data on the bank-firm relationship to assess determinants of distress likelihoods in 2009-13. Results show that outstanding trade debt is affected by the liquidity position of a firm and by positive spatial effects. Trade credit chain reactions are found to exert, in turn, a positive impact on distress likelihoods during the crisis. The latter effect is comparable in magnitude to the one exerted by individual financial rigidity, and stresses the importance to include complex interactions between firms in the analysis of the solvency behavior.

The tectonically-confined Firenzuola turbidite system (Miocene, Marnoso-arenacea Formation, northern Apennines, Italy): an example of facies variations related to the basin morphology

The Firenzuola turbidite system formed during a paroxysmal phase of thrust propagation, involving the upper Serravallian deposits of the Marnoso-arenacea Formation (MAF). During this phase the coeval growth of two major tectonic structures, the M. Castellaccio thrust and the Verghereto high, played a key role, causing a closure of the inner basin and a coeval shift of the depocentre to the outer basin. This work focuses on this phase of fragmentation of the MAF basin; it is based on a new detailed high-resolution stratigraphic framework, which was used to determine the timing of growth of the involved structures and their direct influence on sediment dispersal and on the lateral and vertical turbidite facies distribution. The Firenzuola turbidite system stratigraphy is characterized by the occurrence of mass-transport complexes (MTCs) and thick sandstone accumulation in the depocentral area, which passes to finer drape over the structural highs; the differentiation between these two zones increases over time and ends with the deposition of marly units over the structural highs and the emplacement of the Visignano MTC. According to the stratigraphic pattern and turbidite facies characteristics, the Firenzuola System has been split into two phases, namely Firenzuola I and Firenzuola II: the former is quite similar to the underlying deposits, while the latter shows the main fragmentation phase, testifying the progressive isolation of the inner basin and a coeval shift of the depocentre to the outer basin. The final stratigraphic and sedimentological dataset has been used to create a quantitative high-resolution 3D facies distribution using the Petrel software platform. This model allows a detailed analysis of lateral and vertical facies variations that can be exported to several reservoirs settings in hydrocarbon exploration and exploitation areas, since facies distributions and geometries of the reservoir bodies of many sub-surface turbidite basins show a significant relationship to the syndepositional structural activity, but are beyond seismic resolution.