The importance of being unimportant: small firms and small banks in Italy

Maria Minniti

Global Business and Economics Review, 2002, vol. 4, issue 2, 277-295

Abstract: According to the literature on the credit channel, changes in monetary policy affect small firms by changing the costs of external financing. The literature, however, has not yet explored the relationship between the cost of available credit to different groups of borrowers and the competitiveness of the banking industry. I suggest the existence of a relationship between the cost of loans to small borrowers and the degree of concentration in the banking industry. The intuition is that if many banks compete to finance small firms, small firms have the option to switch lender. This, in turn, forces competing banks to absorb, at least in part, the shock introduced by the change in monetary policy thereby sheltering small firms from the negative asymmetric effect of monetary policy.

Keywords: credit channel; monetary policy; small firms; SMEs; Italy; external financing; banking industry; credit availability; loan costs; lending costs; small banks; banking concentration. (search for similar items in EconPapers)
Date: 2002
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.inderscience.com/link.php?id=6193 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ids:gbusec:v:4:y:2002:i:2:p:277-295

Access Statistics for this article

More articles in Global Business and Economics Review from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().