How Bank Competition Affects Firms' Access to Finance

Combining multi-year, firm-level surveys with country-level panel data for 53 countries, the authors explore the impact of bank competition on firms' access to finance. They find that low competition, as measured by high values of the Lerner index, diminishes firms' access to finance, while commonly-used bank concentration measures are not robust predictors of firms' access to finance. In addition, they find that the impact of competition on access to finance depends on the environment that banks operate in. Some features of the environment, such as greater financial development and better credit information, can mitigate the damaging impact of low competition. But other characteristics, such as high government bank ownership, can exacerbate the negative effect.

Bibliographic Details

Main Authors:	Love, Inessa, Martínez Peria, María Soledad
Language:	English en_US
Published:	World Bank, Washington, DC 2012-08
Subjects:	ACCESS TO BANK, ACCESS TO CREDIT, ACCESS TO FINANCE, ACCESSIBILITY, ACCOUNTS RECEIVABLE, ADVERSE SELECTION, AVAILABILITY OF CREDIT, AVAILABILITY OF FINANCE, BAILOUTS, BALANCE SHEET, BANK ASSETS, BANK BRANCH, BANK COMPETITION, BANK ENTRY, BANK HOLDING, BANK HOLDING COMPANIES, BANK LOAN, BANK MARKET, BANK MERGERS, BANK POLICY, BANK REGULATION, BANKING INDUSTRY, BANKING MARKET, BANKING MARKETS, BANKING SECTOR, BANKING SECTORS, BANKING SYSTEM, BANKING SYSTEMS, BANKS, BORROWING, CENTRAL BANKS, CHECKS, COLLATERAL, COMPETITIVENESS, CONSOLIDATION, CONSUMER PROTECTION, CONTRACT ENFORCEMENT, COUNTRY COMPARISONS, CREDIT BUREAU, CREDIT CONSTRAINTS, CREDIT FACILITIES, CREDIT INFORMATION, CREDIT MARKET, CREDIT MARKETS, CREDIT PRODUCTS, CREDIT REGISTRIES, CREDIT REGISTRY, CULTURAL BIASES, DEBT, DENIAL RATES, DEPOSIT, DEPOSITS, DEREGULATION, DERIVATIVE, DEVELOPMENT ECONOMICS, DEVELOPMENT POLICY, DOMESTIC CREDIT, DUMMY VARIABLE, DUMMY VARIABLES, ECONOMIC GROWTH, ELASTICITY, EMERGING MARKETS, EMPIRICAL EVIDENCE, EMPIRICAL STUDIES, ENVIRONMENTS, EXPORTER, EXPORTERS, EXTERNAL DEBT, FEDERAL RESERVE, FEDERAL RESERVE BANK, FINANCIAL ACCESS, FINANCIAL COSTS, FINANCIAL CRISIS, FINANCIAL DEVELOPMENT, FINANCIAL INSTITUTION, FINANCIAL INTERMEDIATION, FINANCIAL MARKETS, FINANCIAL PRODUCT, FINANCIAL REFORM, FINANCIAL SERVICES, FINANCIAL STUDIES, FINANCIAL SYSTEM, FINANCING OBSTACLES, FOREIGN FIRMS, FUTURE RESEARCH, GDP, GDP DEFLATOR, GOVERNMENT BANK, GOVERNMENT BANKS, GOVERNMENT OWNERSHIP, GREATER CREDIT AVAILABILITY, GROSS REVENUE, GROWTH RATE, INDUSTRIAL ECONOMICS, INFLATION, INFLATION RATE, INFORMATION ASYMMETRIES, INPUT PRICES, INTANGIBLE, INTANGIBLE ASSETS, INTEREST RATES, INTERNATIONAL BANK, INVENTORY, INVESTING, INVESTMENT BANKS, LACK OF COMPETITION, LENDER, LENDING INSTITUTIONS, LINE OF CREDIT, LINES OF CREDIT, LOAN, LOAN APPLICATION, LOAN CONTRACTS, LOAN MARKETS, LOAN PRICES, LOCAL BANKS, MARGINAL COST, MARGINAL COSTS, MARKET COMPETITION, MARKET MECHANISMS, MARKET POWER, MARKET SHARE, MARKET STRUCTURE, MONOPOLY, MORTGAGE, MORTGAGE MARKET, MORTGAGE MARKETS, OVERDRAFT, OVERDRAFT FACILITY, OVERDRAFTS, OWNERSHIP STRUCTURE, PERSONAL ASSETS, PERSONNEL EXPENSES, PRIVATE CREDIT, PRIVATE CREDIT BUREAU, PROPERTY RIGHTS, PROPERTY RIGHTS PROTECTION, PUBLIC CREDIT, RETAIL ENTERPRISES, SAVINGS, SHARE OF ASSETS, SMALL BUSINESS, SMALL BUSINESS CREDIT, SMALL BUSINESS LENDING, TOTAL OUTPUT, UNIVERSAL BANKING, VALUE OF COLLATERAL,
Online Access:	http://documents.worldbank.org/curated/en/2012/08/16592677/bank-competition-affects-firms-access-finance https://hdl.handle.net/10986/12010
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