The work analyses the impact of foreign direct investment (FDI) on the diversification of the financial structure and the investment activity of Italian firms. In particular, the paper tests whether firms acquired by a foreign entity modify their propensity towards bank indebtedness. This issue is particularly relevant for our country, where excessive dependence on bank credit is thought to be detrimental to the productivity of domestic firms.
FDI recipient firms modify their financial structure, reducing their recourse to bank credit, also with regards to the financing of their investment activity. This might be the result of the greater exposure of target firms to international management standards, which appears on the one hand to increase management sophistication and on the other to reduce relationship lending.
