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Archive » July - August 2016 » Measuring credit risk in the Italian Construction sector

Measuring credit risk in the Italian Construction sector

Gianluca Mattarocci, Laura Maccari
July / August 2016 - n. 7/8
Jel codes: G24, R31

The Italian construction sector is characterized by a high exposure to the default risk and the last real estate crisis showed the usefulness of new and more complete risk evaluation methodologies for this type of real estate firms. The article aims to evaluate the sector's risk using the rating methodology proposed by Moody's in order to underline its limits for evaluating the Italian market scenario. Results show that a rating constructed mainly on the balance sheet data does not allow to forecast default risk exposure, due to the high relevance of small firms in the market, and this problem is clearer in market crisis scenarios.

 

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