Abstract

http://ssrn.com/abstract=910226
 
 

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Bank Market Power and SME Financing Constraints


Santiago Carbo-Valverde


Bangor Business School

Gregory F. Udell


Indiana University - Department of Finance

Francisco Rodriguez-Fernandez


University of Granada - Department of Economic Theory and History

June 1, 2006

EFA 2006 Zurich Meetings

Abstract:     
Some studies find that higher bank concentration is associated with higher credit availability (information hypothesis) while others maintain that credit rationing is higher in less competitive bank markets (market power hypothesis). This study tests these two competing hypotheses by employing for the first time a competition indicator from the Industrial Organization literature - the Lerner index - as an alternative to concentration measures. The results are sensitive to the choice of market power indicators. The Lerner index is found to be the more consistent indicator and exhibit the larger (and positive) marginal effect on the probability that a firm is financially constrained.

Number of Pages in PDF File: 62

Keywords: Bank market power, SME financing

JEL Classification: G21, D21, D40

working papers series


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Date posted: June 20, 2006  

Suggested Citation

Carbo-Valverde, Santiago and Udell, Gregory F. and Rodriguez-Fernandez, Francisco, Bank Market Power and SME Financing Constraints (June 1, 2006). EFA 2006 Zurich Meetings. Available at SSRN: http://ssrn.com/abstract=910226 or http://dx.doi.org/10.2139/ssrn.910226

Contact Information

Santiago Carbo-Valverde (Contact Author)
Bangor Business School ( email )
Bangor Business School
College Road
Gwynedd LL57 2DG, Wales LL57 2DG
United Kingdom
Gregory F. Udell
Indiana University - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
Francisco Rodriguez-Fernandez
University of Granada - Department of Economic Theory and History ( email )
Granada
Spain
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