We investigate the determinants of multiple-bank relationships using a new
data set comprising 1079 firms across 20 European countries. We document la
rge cross-country variation in the average number of bank relationships per
firm, uncovering a richness in European financial systems that extends bey
ond the standard description of being "bank-dominated." After controlling f
or a variety of firm-specific characteristics, we find that firms maintain
more bank relationships, on average, in countries with inefficient judicial
systems and poor enforcement of creditor rights. Firms also maintain more
relationships in countries with unconcentrated but stable banking systems a
nd active public bond markets. Journal of Economic Literature Classificatio
n Numbers: G21, C41 (C) 2000 Academic Press.