Bank Competition, Financing Obstacles, and Access to Credit
Theory makes ambiguous predictions about the effects of bank concentration on access to external finance. Using a unique data base for 74 countries of financing obstacles and financing patterns for firms of small, medium, and large size, the author...
| Main Authors: | , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2003/03/2183609/bank-competition-financing-obstacles-access-credit http://hdl.handle.net/10986/19161 |
| Summary: | Theory makes ambiguous predictions about
the effects of bank concentration on access to external
finance. Using a unique data base for 74 countries of
financing obstacles and financing patterns for firms of
small, medium, and large size, the authors assess the
effects of banking market structure on financing obstacles
and the access of firms to bank finance. The authors find
that bank concentration increases financing obstacles and
decreases the likelihood of receiving bank finance, with the
impact decreasing in size. The relation of bank
concentration and financing obstacles is dampened in
countries with well developed institutions, higher levels of
economic and financial development, and a larger share of
foreign-owned banks. The effect is exacerbated by more
restrictions on banks' activities, more government
interference in the banking sector, and a larger share of
government-owned banks. Finally, it is possible to alleviate
the negative impact of bank concentration on access to
finance by reducing activity restrictions. |
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