Universal Banking and the Future of Small Business Lending

66 Pages Posted: 11 Nov 2008  

Allen N. Berger

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

Gregory F. Udell

Indiana University - Kelley School of Business - Department of Finance

Date Written: 1995

Abstract

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.

Keywords: bank, universal, loan, collateral

Suggested Citation

Berger, Allen N. and Udell, Gregory F., Universal Banking and the Future of Small Business Lending (1995). NYU Working Paper No. FIN-95-009. Available at SSRN: https://ssrn.com/abstract=1298316

Allen N. Berger (Contact Author)

University of South Carolina - Darla 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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