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Purpose
The purpose of this paper is to determine whether bank debt‐maturity decisions are conditioned by growth opportunities, the firms’ ownership structure, or the institutional environment.
Design/methodology/approach
The empirical analysis is undertaken using an unbalanced panel data of Chilean and Spanish firms.
Findings
The results indicate that when banks are not allowed to become stockholders, managers use bank debt‐maturity as a corporate governance mechanism. When banks can participate in the ownership of the firms that they finance, short‐term bank debt can serve as a substitute for a governance mechanism.
Originality/value
The main contribution of this paper is the analysis of how differences in financial development among countries modify financial decisions by firms.
© Emerald Group Publishing Limited
2014
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