Bank Ownership Structure, SME Lending and Local Credit Markets

57 Pages Posted: 16 Oct 2014

See all articles by Iftekhar Hasan

Iftekhar Hasan

Fordham University - Gabelli School of Business; Bank of Finland

Krzysztof Jackowicz

Kozminski University

Oskar Kowalewski

IESEG School of Management; LEM - CNRS 9221

Łukasz Kozłowski

Kozminski University

Multiple version iconThere are 3 versions of this paper

Date Written: August 17, 2014

Abstract

​In this paper, by employing a novel approach, we study the relationship between bank type and small-business lending in a post-transition country. Using a unique dataset on bank branches and firm-level data, we find that local cooperative banks lend more to small businesses than do large domestic banks and foreign-owned banks, even when controlling for the financial situation of the cooperative banks. Additionally, our results suggest that cooperative banks provide loans to small businesses at lower costs than foreign-owned banks or large domestic banks. Finally, we show that small and medium-sized firms perform better in counties with a large number of cooperative banks than in counties dominated by foreign-owned banks or large domestic banks. Our results are important from a policy perspective, as they show that foreign bank entry and industry consolidation may raise valid concerns for small firms in developing countries.

Keywords: small-business lending, cooperative banks, foreign banks, post-transition countries

JEL Classification: G21, G28

Suggested Citation

Hasan, Iftekhar and Jackowicz, Krzysztof and Kowalewski, Oskar and Kozłowski, Łukasz, Bank Ownership Structure, SME Lending and Local Credit Markets (August 17, 2014). Bank of Finland Research Discussion Paper No. 22/2014. Available at SSRN: https://ssrn.com/abstract=2509276 or http://dx.doi.org/10.2139/ssrn.2509276

Iftekhar Hasan (Contact Author)

Fordham University - Gabelli School of Business ( email )

Rose Hill Campus Bronx
New York, NY 10458
United States

Bank of Finland ( email )

P.O. Box 160
Helsinki 00101
Finland

Krzysztof Jackowicz

Kozminski University ( email )

ul. JagielloDska 57/59
Warsaw, 03-303
Poland

Oskar Kowalewski

IESEG School of Management ( email )

1 Parvis de La Défense
Socle de la Grande Arche
Paris La Défense cedex, 92044
France

HOME PAGE: http://www.ieseg.fr/en/faculty-and-research/professor/?id=1740

LEM - CNRS 9221 ( email )

Lille
France

HOME PAGE: http://lem.cnrs.fr/

Łukasz Kozłowski

Kozminski University ( email )

ul. Jagiellońska 57/59
Warsaw, Mazowieckie 03-301
Poland

HOME PAGE: http://www.kozminski.edu.pl

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