Bank ownership structure, SME lending and local credit markets

Iftekhar Hasan, Krzysztof Jackowicz, Oskar Kowalewski () and Łukasz Kozłowski

No 22/2014, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: In this paper, by employing a novel approach, we study the relationship between bank type and small-business lending in a post-transition country. Using a unique dataset on bank branches and firm-level data, we find that local cooperative banks lend more to small businesses than do large domestic banks and foreign-owned banks, even when controlling for the financial situation of the cooperative banks. Additionally, our results suggest that cooperative banks provide loans to small businesses at lower costs than foreign-owned banks or large domestic banks. Finally, we show that small and medium-sized firms perform better in counties with a large number of cooperative banks than in counties dominated by foreign-owned banks or large domestic banks. Our results are important from a policy perspective, as they show that foreign bank entry and industry consolidation may raise valid concerns for small firms in developing countries.

Keywords: small-business lending; cooperative banks; foreign banks; post-transition countries (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2014
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https://www.econstor.eu/bitstream/10419/212297/1/bof-rdp2014-022.pdf (application/pdf)

Related works:
Working Paper: Bank Ownership Structure, SME Lending and Local Credit Markets (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2014_022

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