Bank Involvement with SMEs : Beyond Relationship Lending

The "conventional wisdom" in academic and policy circles argues that, while large and foreign banks are generally not interested in serving SMEs, small and niche banks have an advantage because they can overcome SME opaqueness through relationship lending. This paper shows that there is a...

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Main Authors:	de la Torre, Augusto, Martinez Peria, Maria Soledad, Schmukler, Sergio L.
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Banks Other Depository Institutions Micro Finance Institutions Mortgages G210 Financial Institutions and Services: Government Policy and Regulation G280 Firm Performance: Size, Diversification, and Scope L250 Microeconomic Analyses of Economic Development O120 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 Socialist Enterprises and Their Transitions P310 Socialist Institutions and Their Transitions: Financial Economics P340
Online Access:	http://hdl.handle.net/10986/5589

id	okr-10986-5589
recordtype	oai_dc
spelling	okr-10986-55892021-04-23T14:02:23Z Bank Involvement with SMEs : Beyond Relationship Lending de la Torre, Augusto Martinez Peria, Maria Soledad Schmukler, Sergio L. Banks Other Depository Institutions Micro Finance Institutions Mortgages G210 Financial Institutions and Services: Government Policy and Regulation G280 Firm Performance: Size, Diversification, and Scope L250 Microeconomic Analyses of Economic Development O120 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 Socialist Enterprises and Their Transitions P310 Socialist Institutions and Their Transitions: Financial Economics P340 The "conventional wisdom" in academic and policy circles argues that, while large and foreign banks are generally not interested in serving SMEs, small and niche banks have an advantage because they can overcome SME opaqueness through relationship lending. This paper shows that there is a gap between this view and what banks actually do. Banks perceive SMEs as a core and strategic business and seem well-positioned to expand their links with SMEs. The intensification of bank involvement with SMEs in various emerging markets is neither led by small or niche banks nor highly dependent on relationship lending. Moreover, it has not been derailed by the 2007-2009 crisis. Rather, all types of banks are catering to SMEs and large, multiple-service banks have a comparative advantage in offering a wide range of products and services on a large scale, through the use of new technologies, business models, and risk management systems. 2012-03-30T07:33:34Z 2012-03-30T07:33:34Z 2010 Journal Article Journal of Banking and Finance 03784266 http://hdl.handle.net/10986/5589 EN CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Publications & Research :: Journal Article Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Banks Other Depository Institutions Micro Finance Institutions Mortgages G210 Financial Institutions and Services: Government Policy and Regulation G280 Firm Performance: Size, Diversification, and Scope L250 Microeconomic Analyses of Economic Development O120 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 Socialist Enterprises and Their Transitions P310 Socialist Institutions and Their Transitions: Financial Economics P340
spellingShingle	Banks Other Depository Institutions Micro Finance Institutions Mortgages G210 Financial Institutions and Services: Government Policy and Regulation G280 Firm Performance: Size, Diversification, and Scope L250 Microeconomic Analyses of Economic Development O120 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 Socialist Enterprises and Their Transitions P310 Socialist Institutions and Their Transitions: Financial Economics P340 de la Torre, Augusto Martinez Peria, Maria Soledad Schmukler, Sergio L. Bank Involvement with SMEs : Beyond Relationship Lending
description	The "conventional wisdom" in academic and policy circles argues that, while large and foreign banks are generally not interested in serving SMEs, small and niche banks have an advantage because they can overcome SME opaqueness through relationship lending. This paper shows that there is a gap between this view and what banks actually do. Banks perceive SMEs as a core and strategic business and seem well-positioned to expand their links with SMEs. The intensification of bank involvement with SMEs in various emerging markets is neither led by small or niche banks nor highly dependent on relationship lending. Moreover, it has not been derailed by the 2007-2009 crisis. Rather, all types of banks are catering to SMEs and large, multiple-service banks have a comparative advantage in offering a wide range of products and services on a large scale, through the use of new technologies, business models, and risk management systems.
format	Journal Article
author	de la Torre, Augusto Martinez Peria, Maria Soledad Schmukler, Sergio L.
author_facet	de la Torre, Augusto Martinez Peria, Maria Soledad Schmukler, Sergio L.
author_sort	de la Torre, Augusto
title	Bank Involvement with SMEs : Beyond Relationship Lending
title_short	Bank Involvement with SMEs : Beyond Relationship Lending
title_full	Bank Involvement with SMEs : Beyond Relationship Lending
title_fullStr	Bank Involvement with SMEs : Beyond Relationship Lending
title_full_unstemmed	Bank Involvement with SMEs : Beyond Relationship Lending
title_sort	bank involvement with smes : beyond relationship lending
publishDate	2012
url	http://hdl.handle.net/10986/5589
_version_	1764395592338898944

Bank Involvement with SMEs : Beyond Relationship Lending

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