Is there anything special about local banks as SME lenders? Evidence from bank corrective programs

Iftekhar Hasan, Krzysztof Jackowicz, Robert Jagiełło, Oskar Kowalewski () and Łukasz Kozłowski
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Krzysztof Jackowicz: Department of Banking, Insurance and Risk, Kozminski University, Poland
Robert Jagiełło: Warsaw School of Economics and National Bank of Poland
Łukasz Kozłowski: Department of Banking, Insurance and Risk, Kozminski University, Poland

No 2018-ACF-06, Working Papers from IESEG School of Management

Abstract: We re-investigate the special role of local banks in shaping the financial constraints of small and medium-sized enterprises (SMEs). Using a comprehensive dataset from an emerging economy, including the information on local bank corrective programs, we find that local banks remain privileged and, most importantly, difficult to replace lenders for SMEs. We show that the deterioration of a SME’s access to bank financing linked to local banks’ corrective programs depends on the presence of other healthy local banks in the SME’s vicinity. Furthermore, we demonstrate that healthy local banks, when their neighboring peers experience financial difficulties, substantially increase lending.

Keywords: Smart Beta; strategic beta; factor investing; factor selection; Bayesian variable selection (search for similar items in EconPapers)
Pages: 41 pages
Date: 2018-10
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-ent and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:ies:wpaper:f201806

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