Do local banking market structures matter for SME financing and performance? New evidence from an emerging economy
Iftekhar Hasan (),
Oskar Kowalewski () and
Journal of Banking & Finance, 2017, vol. 79, issue C, 142-158
This paper investigates the relationship between local banking structures and SMEs’ access to debt and performance. Using a unique dataset on bank branch locations in Poland and firm-, county-, and bank-level data, we conclude that a strong position for local cooperative banks facilitates access to bank financing, lowers financial costs, boosts investments, and favours growth for SMEs. Moreover, counties in which cooperative banks hold a strong position are characterized by a more rapid pace of new firm creation. The opposite effects appear in the majority of cases for local banking markets dominated by foreign-owned banks. Consequently, our findings are important from a policy perspective because they show that foreign bank entry and industry consolidation may raise valid concerns for SME prospects in emerging economies.
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)
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Working Paper: Do local banking market structures matter for SME financing and performance? New evidence from an emerging economy (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:79:y:2017:i:c:p:142-158
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