Universal Banking and the Future of Small Business Lending
Allen N. Berger
University of South Carolina - Moore School of Business; Wharton Financial Institutions Center; Tilburg University - CentER
Gregory F. Udell
Indiana University Bloomington - Department of Finance
NYU Working Paper No. FIN-95-009
We examine the contention that as banks become larger and more organizationally complex i.e., more like universal banks they may reduce the supply of credit to small business borrowers. This would be consistent with an effort to reduce Williamson-type managerial diseconomies in providing services for large and small borrowers jointly. We investigate the empirical association of loan price and quantity with bank size and complexity, using a data set with over 900,00 bank loans. The data support the proposition that larger, more complex banks may reduce the supply of small business lending, although other institutions may replace many of these loans.
Number of Pages in PDF File: 66
Keywords: bank, universal, loan, collateralworking papers series
Date posted: November 11, 2008
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