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http://ssrn.com/abstract=874825
 
 

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A More Complete Conceptual Framework for Financing of Small and Medium Enterprises


Allen N. Berger


University of South Carolina - Moore School of Business; Wharton Financial Institutions Center; European Banking Center

Gregory F. Udell


Indiana University - Kelley School of Business - Department of Finance

December 2005

World Bank Policy Research Working Paper No. 3795

Abstract:     
The authors propose a more complete conceptual framework for analysis of credit availability for small and medium enterprises (SMEs). In this framework, lending technologies are the key conduit through which government policies and national financial structures affect credit availability. They emphasize a causal chain from policy to financial structures which affect the feasibility and profitability of different lending technologies. These technologies, in turn, have important effects on SME credit availability. Financial structures include the presence of different financial institution types and the conditions under which they operate. Lending technologies include several transactions technologies, plus relationship lending. The authors argue that the framework implicit in most of the literature is oversimplified, neglects key elements of the chain, and often yields misleading conclusions. A common oversimplification is the treatment of transactions technologies as a homogeneous group, unsuitable for serving informationally opaque SMEs, and a frequent misleading conclusion is that large institutions are disadvantaged in lending to opaque SMEs.

Number of Pages in PDF File: 31

Keywords: SMEs, Banks, Relationship Lending, Governance, International.

JEL Classification: G21, G28, G34, L11, F33

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Date posted: January 11, 2006  

Suggested Citation

Berger, Allen N. and Udell, Gregory F., A More Complete Conceptual Framework for Financing of Small and Medium Enterprises (December 2005). World Bank Policy Research Working Paper No. 3795. Available at SSRN: http://ssrn.com/abstract=874825

Contact Information

Allen N. Berger (Contact Author)
University of South Carolina - Moore School of Business ( email )
1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-576-8440 (Phone)
803-777-6876 (Fax)
Wharton Financial Institutions Center
Philadelphia, PA 19104-6367
United States
European Banking Center
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
Gregory F. Udell
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States

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