EconPapers    
Economics at your fingertips  
 

Does Bank Market Power Affect SME Financing Constraints?

Robert Ryan, Conor O'Toole () and Fergal McCann ()

No WP472, Papers from Economic and Social Research Institute (ESRI)

Abstract: This paper examines the extent to which bank market power alleviates or magnifies SME credit constraints using a large panel dataset of more than 118,000 SMEs across 20 European countries over the period 2005-2008. To our knowledge, this is the first study to examine bank market power and SME credit constraints in an international, developed economy setting. Moreover, our study is the first to address a number of econometric considerations simultaneously, in particular by controlling for the availability of profitable investment opportunities using a structural Q model of investment. Our results strongly support the market power hypothesis, namely, that increased market power results in increased financing constraints for SMEs. Additionally, we find that the relationship exhibits heterogeneity across firm size and opacity in a manner that suggests that the true relationship between bank market power and financing constraints might not be fully explained by the existing theory. Finally, we find that the effect of bank market power on financing constraints increases in financial systems that are more bank dependent.

New Economics Papers: this item is included in nep-ban, nep-ent and nep-eur
Date: 2013-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
http://www.esri.ie/pubs/WP472.pdf (application/pdf)

Related works:
Journal Article: Does bank market power affect SME financing constraints? (2014) Downloads
Working Paper: Does bank market power affect SME financing constraints? (2014) Downloads
Working Paper: Does Bank Market Power Affect SME Financing Constraints? (2014) Downloads
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:esr:wpaper:wp472

Access Statistics for this paper

More papers in Papers from Economic and Social Research Institute (ESRI) Contact information at EDIRC.
Bibliographic data for series maintained by Sarah Burns ().

 
Page updated 2019-07-11
Handle: RePEc:esr:wpaper:wp472