Bank Size or Distance: What Hampers Innovation Adoption by SMEs?

34 Pages Posted: 19 Sep 2007 Last revised: 29 Jun 2014

See all articles by Pietro Alessandrini

Pietro Alessandrini

Università Politecnica delle Marche - Faculty of Economics

Andrea Filippo Presbitero

Università Politecnica delle Marche - Department of Economics; Centre for Macroeconomics & Finance Research (CeMaFiR)

Alberto Zazzaro

Università Politecnica delle Marche - Faculty of Economics

Date Written: September 24, 2008

Abstract

A growing body of research is focusing on banking organizational issues, emphasizing the difficulties encountered by hierarchically organized banks in lending to informationally opaque borrowers. While the two extreme cases of hierarchical and non-hierarchical organizations are typically contrasted, what shapes the degree of hierarchy and how to measure it remain fairly vague. In this paper we compare bank size and distance between a bank's branches and headquarter as possible sources of organizational frictions, by studying their impact on small firms' likelihood of introducing innovations. Results show that SMEs located in provinces where the local banking system is functionally distant are less inclined to introduce innovations, while the market share of large banks is only slightly correlated with firms' propensity to innovate.

Keywords: Functional Distance, Bank Size, Innovation, SMEs

JEL Classification: G21, G34, O31, R51

Suggested Citation

Alessandrini, Pietro and Presbitero, Andrea Filippo and Zazzaro, Alberto, Bank Size or Distance: What Hampers Innovation Adoption by SMEs? (September 24, 2008). Available at SSRN: https://ssrn.com/abstract=1015326 or http://dx.doi.org/10.2139/ssrn.1015326

Pietro Alessandrini

Università Politecnica delle Marche - Faculty of Economics ( email )

Piazzale Martelli, 8
60121 Ancona
Italy

Andrea Filippo Presbitero

Università Politecnica delle Marche - Department of Economics ( email )

Piazzale Martelli, 8
Ancona, AN 60121
Italy
+39 0712207074 (Phone)

HOME PAGE: http://sites.google.com/site/presbitero/

Centre for Macroeconomics & Finance Research (CeMaFiR) ( email )

Piazza Mirabello, 2
Milan, 20100
Italy

Alberto Zazzaro (Contact Author)

Università Politecnica delle Marche - Faculty of Economics ( email )

Piazzale Martelli, 8
60121 Ancona
Italy

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