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Financial structure and bank relationships of Italian multinational firms

Author

Listed:
  • Raffaello Bronzini

    (Bank of Italy, Rome Branch)

  • Alessio D’Ignazio

    (Bank of Italy, Directorate General for Economics, Statistics and Research)

  • Davide Revelli

    (Bank of Italy, Genoa Branch)

Abstract

This paper examines the financial structure and the bank relationships of Italian multinational firms. We show that multinationals are on average more leveraged than non-internationalized firms. Moreover, they have a larger share of financial and bank debt out of total debt, maintain more bank relationships, are less dependent on the main bank for the firm, and benefit from lower interest rates. Lastly, multinationals take greater advantage of intra-group financing than non-internationalized firms. These results are robust to estimation methods that tackle the potential endogeneity of the choice to go international, such as matching and instrumental variables estimation.

Suggested Citation

  • Raffaello Bronzini & Alessio D’Ignazio & Davide Revelli, 2021. "Financial structure and bank relationships of Italian multinational firms," Temi di discussione (Economic working papers) 1326, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_1326_21
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    More about this item

    Keywords

    multinational companies; foreign direct investment; financial structure; bank-firm relationships;
    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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