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Financial structure and bank relationships of Italian multinational firms

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  • Bronzini, Raffaello
  • D’Ignazio, Alessio
  • Revelli, Davide

Abstract

This paper examines the financial structure and bank relationships of multinational firms in Italy, a large European country strongly reliant on bank debt. We show that multinationals are, on average, more leveraged than non-internationalized companies. Moreover, multinationals have larger shares of both financial debt and bank debt as a percentage of total debt, benefit from lower interest rates, maintain more bank relationships, and are less dependent on the primary bank for the firm. Overall, these findings suggest that globally diversified firms have better access to credit markets than domestic companies. These results are robust to estimation methods that address the potential endogeneity of the choice to go international, such as matching and instrumental variable estimation.

Suggested Citation

  • Bronzini, Raffaello & D’Ignazio, Alessio & Revelli, Davide, 2022. "Financial structure and bank relationships of Italian multinational firms," Journal of Multinational Financial Management, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:mulfin:v:66:y:2022:i:c:s1042444x22000330
    DOI: 10.1016/j.mulfin.2022.100762
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    More about this item

    Keywords

    Multinational companies; Foreign direct investment; Financial structure; Bank–firm relationships; Corporate finance;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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