Financial Distress in Italian Public Universities: General Predictors and Features of Emerging Issues

In the last years, Italian public universities were affected by several reforms regarding not only the introduction of more rational funding allocation systems but also the possibility of closing universities that are persistently in a financial distress state. If, on the one hand, the prediction of bankruptcy will have the effect of making continuous performance improvement even more important for universities as a necessary condition to survive, on the other hand, the new legislation faces a context, the Italian one, with a number of critical issues that will make this task even more complicated. One of the most important issues concerns the fact that public resources are still allocated following a social cohesion principle and not a meritocratic one. Hence the interest to investigate the financial health of Italian universities in order to better understand how the risk of bankruptcy is framed. The results show that the persistence of a social cohesion principle despite the reforms makes the correlation between performance and financial distress still weak with the result of exposing indiscriminately both high and low performing Italian universities at risk of insolvency.