Review of Corporate Finance > Vol 1 > Issue 1-2

Corporate Capital Structure and Firm Value: International Evidence on the Special Roles of Bank Debt

Allen N. Berger, University of South Carolina, USA, , Sadok El Ghoul, University of Alberta, Canada, , Omrane Guedhami, University of South Carolina, USA, , Jiarui Guo, University of South Carolina, USA,
Suggested Citation
Allen N. Berger, Sadok El Ghoul, Omrane Guedhami and Jiarui Guo (2021), "Corporate Capital Structure and Firm Value: International Evidence on the Special Roles of Bank Debt", Review of Corporate Finance: Vol. 1: No. 1-2, pp 1-41.

Publication Date: 29 Apr 2021
© 2021 A. N. Berger, S. El Ghoul, O. Guedhami and J. Guo
Corporate finance
Capital structurebanksbank specialnessdebt financedebt intensity


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In this article:
1. Introduction 
2. Data and Variables 
3. Methodology and Main Empirical Results 
4. Identification Concerns 
5. Subsample Analyses 
6. Channel Analysis 
7. Conclusions, Future Research Suggestions, and Policy Implications 


We contribute to the corporate capital structure and bank specialness literatures by studying the effects of bank debt on corporate value. We apply novel methodology to almost 60,000 firms in 110 countries over 17 years – over 300,000 total observations. We find that bank term loans and credit lines are strongly positively associated with firm value, but only when employed very intensively – at 90% or more of total corporate debt. These effects are consistent with bank specialness at high-intensity levels. These findings support previously untested theoretical predictions that bank specialness would be stronger or exist only at high bank debt intensities. Our results hold broadly, but are stronger for credit-constrained firms – small firms and those in low-income countries. Channel analysis suggests that term loans boost short-term firm performance more, while credit lines better promote long-run growth. The findings suggest future research topics and have policy implications, particularly during the COVID-19 crisis.