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Local banks as difficult-to-replace SME lenders: Evidence from bank corrective programs

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

Journal of Banking & Finance, 2021, vol. 123, issue C

Abstract: In this study, we assess capabilities of different types of banks to cater to the financial needs of small and medium-sized enterprises (SMEs). Using a comprehensive dataset from an emerging economy, including the information on local banks’ corrective programs, we find that local banks remain difficult-to-replace lenders for SMEs. We show that presence of healthy local banks in an SME's vicinity immunizes the SME against the deterioration of access to bank financing linked to other local banks’ corrective programs. In contrast, large banks are unable to replace the lost lending from local competitors under corrective programs.

Keywords: SME financing; Local banks; Emerging economies; Corrective programs (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.jbankfin.2020.106029

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