Bank size, lending technologies, and small business finance
Under the current paradigm in small business lending research, large banks tend to specialize in lending to relatively large, informationally transparent firms using "hard" information, while small banks have advantages in lending to smaller, less transparent firms using "soft" information. We go beyond this paradigm to analyze the comparative advantages of large and small banks in specific lending technologies. Our analysis begins with the identification of fixed-asset lending technologies used to make small business loans. Our results suggest that large banks do not have equal advantages in all of these hard lending technologies and these advantages are not all increasing monotonically in firm size, contrary to the predictions of the current paradigm. We also analyze lines of credit without fixed-asset collateral to focus on relationship lending. We confirm that small banks have a comparative advantage in relationship lending, but this appears to be strongest for lending to the largest firms.
Year of publication: |
2011
|
---|---|
Authors: | Berger, Allen N. ; Black, Lamont K. |
Published in: |
Journal of Banking & Finance. - Elsevier, ISSN 0378-4266. - Vol. 35.2011, 3, p. 724-735
|
Publisher: |
Elsevier |
Keywords: | Banks Lending technologies Relationship lending Small business |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Bank size, lending technologies, and small business finance
Berger, Allen N., (2011)
-
The federal reserve’s discount window and TAF programs : “pushing on a string?
Berger, Allen N., (2014)
-
Bank loan supply responses to Federal Reserve emergency liquidity facilities
Berger, Allen N., (2017)
- More ...