Local banks as difficult-to-replace SME lenders: Evidence from bank corrective programs

Iftekhar Hasan; Krzysztof Jackowicz; Robert Jagiełło; Oskar Kowalewski; Łukasz Kozłowski

doi:10.1016/j.jbankfin.2020.106029

Journal of Banking & Finance Vol. 123 2021

Local banks as difficult-to-replace SME lenders: Evidence from bank corrective programs

Iftekhar Hasan^1,2,3; Krzysztof Jackowicz⁴; Robert Jagiełło⁵; Oskar Kowalewski^6,7,8; Łukasz Kozłowski⁴

¹ Bank of Finland · ² Fordham University · ³ The University of Sydney · ⁴ Kozminski University · ⁵ National Bank of Poland · ⁶ Centre National de la Recherche Scientifique · ⁷ Lille Économie Management · ⁸ Institut d'Economie Scientifique Et de Gestion

Abstract

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.

DOI: 10.1016/j.jbankfin.2020.106029
Volume: 123
Pages: 106029
Language: en
Sources: semanticscholar openalex crossref

Local banks as difficult-to-replace SME lenders: Evidence from bank corrective programs

Abstract

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