Affordable Access

Banking Market Concentration and Credit Availability to Small Businesses

Authors
Publication Date
Keywords
  • G28 - Government Policy And Regulation
  • G21 - Banks
  • Depository Institutions
  • Micro Finance Institutions
  • Mortgages

Abstract

This paper examines how banking market concentration affects small businesses finance. Using the Survey of Small Business Finance, the empirical model show that bank concentration may adversely affect the amount of credit supplied to small businesses. We find that bank concentration decreases the L/C limits of firms significantly, while there is no statistically significant difference in L/C balance across banking markets. We also show that bank concentration lowers the overall debt-to-asset ratio of small firms that includes loans from nonbank institutions, suggesting that credit from non-bank institutions do not fully make up the effect of bank concentration.

There are no comments yet on this publication. Be the first to share your thoughts.