Covenants are particular clauses in debt contracts of firms that restrict business policy, giving creditors the possibility of putting precise actions into force – normally early repayment – when the covenants are violated. The main purpose of covenants given in the literature is to resolve...

In Italy the adoption of convenants, and, more in detail, the use of bond covenants, is constrained by the predominance of SMEs, the significant role of relationship banking, the high costs related to public placements, the lack of investors‘ financial culture, the low amount of capital...