Premium
Bank Size and Lending Specialisation
Author(s) -
Bonfim Diana,
Dai Qinglei
Publication year - 2017
Publication title -
economic notes
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.274
H-Index - 19
eISSN - 1468-0300
pISSN - 0391-5026
DOI - 10.1111/ecno.12082
Subject(s) - small business , business , core (optical fiber) , population , access to finance , financial system , finance , materials science , demography , sociology , composite material
Using micro‐level data on the entire population of business loans of a bank‐based economy, we empirically test some of the core predictions of the small and medium enterprise (SME) financing literature, examining banks’ lending specialisations in firm size and lending technologies. Rejecting the conventional belief that smaller banks focus more on relationship loans than larger banks, we find that relationship lending is equally common for small and large banks. However, supporting the SME finance theories on the organizational advantages of small banks, we find that smaller banks provide more access to relationship loans to small firms, though such loans are usually more expensive.