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Institutions, banking structure and the cost of debt: new international evidence

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  • Celia Álvarez‐Botas
  • Víctor M. González

Abstract

This paper analyses the effect of institutions and the structure of the banking system on the cost of debt for a sample of firms from 37 countries. The cost of debt decreases with the rule of law, the protection of creditors’ rights and the weight of banks in the economy. Bank financing and bank concentration have a positive differential effect on the cost of debt in those countries where the financial difficulties of banks are greater. Legal enforcement, the protection of creditors’ rights and the weight of bank financing have a greater influence in countries with a lower degree of economic development.

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  • Celia Álvarez‐Botas & Víctor M. González, 2021. "Institutions, banking structure and the cost of debt: new international evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(1), pages 265-303, March.
    • Handle: RePEc:bla:acctfi:v:61:y:2021:i:1:p:265-303
    DOI: 10.1111/acfi.12567
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