Banking Market Concentration and Credit Availability to Small Businesses

Yongjin Park
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Yongjin Park: Connecticut College

Journal of Entrepreneurial Finance, 2008, vol. 12, issue 3, 47-69

Abstract: This paper examines how banking market concentration affects small business credit. Based on an idea that line-of-credit (L/C) limit and L/C balance provide useful proxies for credit supply to and credit demand of a firm, we examine the effect of bank concentration on L/C limits and L/C balances. Using Heckman selection models to correct for sample selection, bank concentration is found to lower limits of L/Cs, where there was no statistically significant difference in L/C balances. We also find that small firms in concentrated banking markets have lower overall institutional debt-to-asset ratios.

Keywords: Banking; Concentration; Credit (search for similar items in EconPapers)
JEL-codes: G21 G32 L25 (search for similar items in EconPapers)
Date: 2008
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