Is Small Beautiful? Financial Structure, Size and Access to Finance

Combining two unique data sets, this paper explores the relationship between the relative importance of different financial institutions and their average size and firms' access to financial services. Specifically, the authors explore the relationship between the share in total financial assets and average asset size of banks, low-end financial institutions, and specialized lenders, on the one hand, and firms' access to and use of deposit and lending services, on the other hand. Two findings stand out. First, the dominance of banks in most developing and emerging markets is associated with lower use of financial services by firms of all sizes. Low-end financial institutions and specialized lenders seem particularly suited to ease access to finance in low-income countries. Second, there is no evidence that smaller institutions are better in providing access to finance. To the contrary, larger specialized lenders and larger banks might actually ease small firms' financing constraints, but only at low levels of gross domestic product per capita.

Bibliographic Details

Main Authors:	Singer, Dorothe, Beck, Thorsten, Demirgüç-Kunt, Asli
Language:	English
Published:	2011-09-01
Subjects:	ACCESS INDICATORS, ACCESS TO CREDIT, ACCESS TO EXTERNAL FINANCE, ACCESS TO FINANCE, ACCESS TO FINANCIAL SERVICES, ADVANCED ECONOMIES, ALTERNATIVE FINANCING, BANK ASSETS, BANKING SECTOR, BANKING SECTOR STABILITY, BANKS, BUILDING SOCIETIES, CAPITAL ALLOCATION, CAPITAL REQUIREMENTS, CASH FLOWS, COMMERCIAL BANK, COMMERCIAL BANKS, COMMUNITY BANKING, COMMUNITY BANKS, CONSOLIDATION, COOPERATIVES, CREDIT UNIONS, CURRENCY UNITS, DEPOSIT, DEVELOPING COUNTRIES, DEVELOPMENT BANK, DEVELOPMENT CORPORATION, DIVERSIFICATION, DUMMY VARIABLE, DUMMY VARIABLES, ECONOMIC DEVELOPMENT, ECONOMICS, EMERGING MARKET, EMERGING MARKET COUNTRIES, EMERGING MARKETS, ENTRY BARRIERS, EXCHANGE RATES, EXTERNAL FINANCE, EXTERNAL FINANCING, FACTORING, FINANCE ACCESS, FINANCE COMPANIES, FINANCIAL ACCESS, FINANCIAL ASSETS, FINANCIAL DEVELOPMENT, FINANCIAL ECONOMICS, FINANCIAL HISTORY, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL INTERMEDIATION, FINANCIAL PRODUCTS, FINANCIAL SECTOR ASSESSMENT, FINANCIAL SECTOR INDICATOR, FINANCIAL SECTOR INDICATORS, FINANCIAL SERVICE, FINANCIAL STRUCTURE, FINANCIAL SYSTEM, FINANCIAL SYSTEMS, FINANCING NEEDS, FINANCING OBSTACLES, FIRM SIZE, FIRM SIZES, FIRMS, FOREIGN INVESTOR, FOREIGN INVESTORS, GOVERNMENT OWNERSHIP, GROSS DOMESTIC PRODUCT, GROUP LENDING, HOUSING, INSURANCE, INSURANCE COMPANIES, INTERNATIONAL BANK, INTERNATIONAL FINANCIAL STATISTICS, LARGE ENTERPRISES, LEASING, LEGAL CONSTRAINTS, LENDERS, LENDING TECHNIQUES, LIMITED ACCESS, LINE OF CREDIT, LOAN, LOCAL CURRENCY, LOCAL MARKET, MARKET STRUCTURE, MARKET STRUCTURES, MEDIUM ENTERPRISES, MERCHANT, MERCHANT BANKS, MICRO-FINANCE, MICROFINANCE, MICROFINANCE INSTITUTIONS, MINIMUM CAPITAL REQUIREMENTS, NBFI, NBFIS, NON-BANK, NONBANK INSTITUTIONS, OUTREACH, OVERDRAFT, OVERDRAFT FACILITIES, OVERDRAFT FACILITY, OVERDRAFTS, PENSION, PENSION FUNDS, POSTAL BANKS, PRIVATE BANKS, RISK MANAGEMENT, RISK MANAGEMENT SYSTEMS, RURAL BANKS, SAVINGS, SHARE OF BANK ASSETS, SMALL BANKS, SMALL BUSINESS, SMALL ENTERPRISES, SMALL FIRMS, SME, SME FINANCE, SME FINANCING, SME LENDING, SPECIAL CREDIT, SPECIAL CREDIT INSTITUTIONS, SPECIALIZED BANKS, SUBSIDIARIES, SUBSIDIARY, TRANSACTION, UNDERLYING ASSETS,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20110922133048 https://hdl.handle.net/10986/3569
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