What are the benefits of access to the bond market for unlisted firms, and how does it affect their bank lending conditions? Using a regulatory reform that allowed unlisted firms to issue minibonds, we address these questions comparing new bank loans to issuers with concurrent loans to matched non-issuers. After the first minibond issuance, issuers obtain lower interest rates on bank loans of similar maturity, largely reflecting a shift in the seniority structure of corporate debt, and reduce the use of bank loans while increasing their total financial debt. They also increase turnover, total and fixed assets, particularly intangible assets.

When the debt of firms in distress is dispersed, a restructuring agreement may be difficult to reach because of free riding. We develop a repeated game in which banks come across each other frequently, and can threaten a punishment in case of free riding. As the number of lending banks grows, the chance of meeting again a bank and of being punished for free riding increases, improving the likelihood of cooperation. Looking at Italian firms in distress, we find that the estimated restructuring probability, as well as the probability of a positive outcome of financial distress, increases with the number of banks up to a threshold beyond which coordination problems prevail.

Although the theory of multinational banking has pointed out the importance of local profit opportunities, the empirical evidence is still poor and deserves further investigation. To this end, we analyse entry decisions and activity levels of foreign banks operating in Italy between 1983 and 1998. We consider 22 OECD countries, 10 of which had at least one bank (branch or subsidiary) in Italy. Entries and activity levels were related to the degree of economic integration as well as to the financial market features of the home country relative to Italy. Unlike other studies, besides economic integration, the relative profitability of the banking activity proves to be a significant variable in that it highlights the importance of local market conditions. In the past decade, increased competition in the Italian banking sector has reduced these profit opportunities, driving foreign banks towards more innovative sectors of financial intermediation.