Financial structure and bank relationships of Italian multinational firms

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. •We examine the financial structure and bank relationships of multinational firms in Italy, a large European country.•Multinationals are more leveraged than domestic companies, have more bank debt and pay lower interest rates.•They maintain more bank relationships and are less dependent on the main bank for the firm.•Overall multinationals have a better supply of financing.•The results are robust to several estimation methods such as OLS, matching and instrumental variables.