Is bank-debt maturity contingent on the financial system?

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.