Does the location of European companies still matter for their access to finance?

This paper investigates the role of European firms' location in their access to capital from 2014 to 2018. Spatial variation in a firm's access to finance triggers differences between the development of rural and urban areas. The study draw on the geography of finance, which explores the phenomenon of the spatial distribution of financial markets, and aim to answer the question of to what extent the location of a firm affects its access to capital. The authors focus on both credit and equity markets and pursue an econometric approach. The paper explore the drivers of the capital structures of European firms with the main control variables connected to the spatial distribution of economic actors. The authors adds to the regional finance literature by examining hard data on the real capital structure patterns of firms. The findings lead to different conclusions: While for the credit market, the location of a firm still matters, financial center bias regarding the primary equity market is fading due to the growing computerization of communication. Highlights: * Companies from financial centers have better access to bank credit. * The concentration of the banking system increases the disparities between the core and periphery. * There is financial center bias in the equity markets in most European countries. * Financial center bias is negatively linked to the computerization of financial markets. [ABSTRACT FROM AUTHOR]

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