Credit Policies in Southern Italy Solid Waste Firms

The aim of the present work is to analyze how relations between financial choices and the capital structure of firms condition the business dynamics of the companies involved. The paper involves an analysis of the balance sheets for the three year period 2005-2007 of firms dealing with urban waste disposal in a region of Southern Italy. The results show how economic dynamics and current tariff policies have resulted in conditions of financial imbalance that, in more than one case, have led to financial bankruptcy. The massive credit given to insolvent public bodies has resulted in excessive risk exposure. The result is levels of debt that it is hard to imagine would be tolerated in companies working under normal market competition. This paper analyzes waste disposal companies dealing in a part of the country that has been defined as underutilized. This sample provides an interesting opportunity to study the policy implications of the crisis and failure of such companies