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Local Banking Development and the Use of Debt Financing by New Firms

Year: 2018

Type: article

Abstract: We investigate the effects of local banking development on the debt financing of new firms using a large sample of Italian firms. Controlling for potential endogeneity issues, we find that new firms are more likely to use bank debt and have higher leverage in provinces with more bank branches relative to population. However, it is important to account for bank heterogeneity. For instance, more foreign banks in a province actually reduce access to bank debt. Taken together, our study provides new and nuanced evidence on the role of local banking development for the debt financing of new firms.

Source: Entrepreneurship Theory and Practice

DOI: 10.1177/1042258718783486

Authors: Marc Deloof, Maurizio La Rocca, Tom Vanacker

Institutions: University of Antwerp, Antwerp Management School, University of Calabria, Ghent University

Language: English

Topic: Corporate Finance and Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

OpenAlex ID: W2889936865