SME lending and banking system stability: Some mechanisms at work

Michael Brei, Blaise Gadanecz and Aaron Mehrotra

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Abstract: This paper sheds light on the effects of SME lending on banking system stability. Using a dataset of 32 economies during 2007–15, we find that higher growth in SME lending is associated with greater banking system stability, as measured by greater distance to default, but only in emerging market economies (EMEs). In EMEs, financial development tends to be lower and information asymmetries higher so that profitable projects may remain unfinanced.

Date: 2020-01-23
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Citations: View citations in EconPapers (15)

Published in Emerging Markets Review, 2020, pp.100676. ⟨10.1016/j.ememar.2020.100676⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02497961

DOI: 10.1016/j.ememar.2020.100676

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