Banking development and corporate financial policies : the game-changing role of FinTech and globalization

Abstract

Banks are the engine of firm growth and the extant literature suggests that the local banking development, in terms of geographical concentration of bank branches and proximity to the customers, matters to corporate financial policies, especially for SMEs. However, new financial technology and globalization of financial markets could threaten the relevance of local bank branches. The present thesis studies two new issues in this field of research and investigates whether FinTech and the international integration of financial markets shape the effect of local banking institutions on firm value creation processes. Results reveal that banking integration and banking digitalization mitigate the role of local banking development. However, the bank-entrepreneur relationship is still important and fosters the provision of bank credit, which represents the fuel that feeds the firm growth.