Local Banks as Difficult-to-replace SME Lenders: Evidence from Bank Corrective Programs

In this study, we assess capabilities of different types of banks to cater to the financial needs of small and medium-sized enterprises (SMEs). Using a comprehensive dataset from an emerging economy, including the information on local banks’ corrective programs, we find that local banks remain difficult-to-replace lenders for SMEs. We show that presence of healthy local banks in an SME's vicinity immunizes the SME against the deterioration of access to bank financing linked to other local banks’ corrective programs. In contrast, large banks are unable to replace the lost lending from local competitors under corrective programs.

15. Februar 2021

Autoren Iftekhar Hasan Krzysztof Jackowicz Robert Jagiełło Oskar Kowalewski Łukasz Kozłowski

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