This article examines the determinants of the mix of private and public debt using
detailed information on the debt structure of 250 publicly traded corporations from
1980 through 1990. We find that the relationship between bank borrowing and the
importance of growth opportunities depends on the number of banks the firm uses
and whether the firm has public debt outstanding. For firms with a single bank
relationship, the reliance on bank debt is negatively related to the importance of
growth opportunities. In contrast, among firms borrowing from multiple banks, the
relationship is positive.