Drivers and Obstacles to Banking SMEs : The Role of Competition and the Institutional Framework

This paper studies the factors banks perceive as drivers and obstacles to financing small and medium enterprises (SMEs), focusing on the role of competition and the institutional framework. Using a survey of banks in Argentina and Chile, the paper shows that, despite alleged differences in the countries' environments regarding rules, regulations, and ease of doing business, SMEs have become a strategic segment for most banks in both countries. In particular, banks have begun to target SMEs due to the significant competition in the corporate and retail sectors. They perceive the SMEs market as highly profitable, large, and with good prospects. Moreover, banks are developing coping mechanisms to overcome the particular institutional obstacles present in each country and to compete for SMEs. Banks' interest in SMEs is not based on government programs, yet policy action might help reduce the cost of providing financing, especially long-term lending.

Bibliographic Details

Main Authors:	de la Torre, Augusto, Martínez Pería, María Soledad, Schmukler, Sergio L.
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	Washington, DC: World Bank 2008-12
Subjects:	ACCESS TO BANK, ACCESS TO EXTERNAL FINANCE, ACCESS TO FINANCE, ACCESS TO FINANCING, ACCESS TO INFORMATION, ADVERTISEMENTS, AMOUNT OF CREDIT, ARBITRAGE, ARREARS, ASYMMETRIC INFORMATION, BALANCE SHEETS, BANK CREDIT, BANK DEPOSITS, BANK EXPOSURE, BANK FINANCING, BANK INVOLVEMENT, BANK LENDING, BANK LOANS, BANK POLICY, BANK SERVICES, BANKING MARKET, BANKING SYSTEM, BANKING SYSTEMS, BANKRUPTCY, BANKRUPTCY PROCEDURES, BANKS, BENEFICIARIES, BIDS, BINDING CONSTRAINT, BUSINESS ACTIVITY, CAPITAL INVESTMENTS, CAPITAL LOANS, CAPITAL MARKETS, CASH FLOWS, CENTRAL BANK, CENTRAL BANKS, COLLATERAL, COLLATERAL REQUIREMENT, COLLATERAL REQUIREMENTS, COMMERCIAL BANKS, COMMERCIAL LOANS, CONFIDENCE IN BANKS, CONSOLIDATION, CONSUMER, CONSUMERS, CONTRACT ENFORCEMENT, CONTRIBUTION, CONTRIBUTIONS, COOPERATIVES, CORPORATE BANKING, CORRUPTION, CREDIT BUREAU, CREDIT BUREAUS, CREDIT CARDS, CREDIT GUARANTEE, CREDIT GUARANTEES, CREDIT LINE, CREDIT LINES, CREDIT MARKET, CREDIT POLICY, CREDIT RISK, CUSTOMER SERVICE, DEBT, DEBT DEFAULT, DEBT PAYMENTS, DEBT RESTRUCTURING, DEBTORS, DEBTS, DEFAULT RATES, DEMAND FOR CREDIT, DEPOSIT, DEPOSITS, DEVELOPING COUNTRIES, DEVELOPMENT BANK, DOCUMENTATION REQUIREMENTS, DOMESTIC BANK, DOMESTIC BANKS, DOMESTIC CURRENCY, ECONOMIC ACTIVITY, ECONOMIC CRISIS, ECONOMICS, EMERGING ECONOMIES, EMERGING MARKET, EMPLOYMENT, ENTREPRENEURS, EXCESS LIQUIDITY, EXCHANGE RATE, EXCLUSION, EXTERNAL FINANCING, FACTORING, FILING FOR BANKRUPTCY, FINANCES, FINANCIAL ACCESS, FINANCIAL CONSTRAINTS, FINANCIAL CONTRACTS, FINANCIAL DEVELOPMENT, FINANCIAL INFORMATION, FINANCIAL INSTITUTIONS, FINANCIAL INSTRUMENTS, FINANCIAL INTERMEDIARIES, FINANCIAL INTERMEDIATION, FINANCIAL REFORMS, FINANCIAL SECTOR, FINANCIAL SERVICES, FINANCIAL STATEMENTS, FINANCIAL SYSTEM, FINANCIAL TRANSACTION, FINANCIAL TRANSACTIONS, FINANCING OBSTACLES, FIXED COSTS, FIXED RATES, FLOW OF INFORMATION, FOREIGN BANKS, FOREIGN EXCHANGE, FOREIGN EXCHANGE TRANSACTIONS, FOREIGN INVESTORS, FUTURE GROWTH, GREATER ACCESS, GUARANTEE FUND, GUARANTEE FUNDS, GUARANTEE SCHEMES, HOUSEHOLDS, INCOME, INCOME SOURCES, INFORMATION GAP, INSTITUTIONAL DEVELOPMENT, INSTRUMENT, INSURANCE, INSURANCE PRODUCTS, INTEREST RATE, INTEREST RATE CEILING, INTEREST RATE RISK, INTEREST RATES, INTEREST RATES ON LOANS, INTERNATIONAL BANK, INTERNATIONAL BANKS, INTERNATIONAL FINANCE, INVESTMENT LOANS, INVESTMENT PROJECTS, JUDICIAL PROCESSES, LACK OF ACCESS, LARGE BANKS, LARGE COMPANIES, LARGE COMPANY, LARGE FIRMS, LAWS, LEGAL CONSTRAINTS, LEGAL REFORM, LEGAL RIGHTS, LINES OF CREDIT, LIQUID ASSETS, LOAN, LOAN AMOUNT, LOAN MARKET, LOAN PORTFOLIOS, LONG-TERM LENDING, LONG-TERM LOANS, LOW INTEREST RATES, MACROECONOMIC ENVIRONMENT, MACROECONOMIC STABILITY, MACROECONOMIC UNCERTAINTY, MARKET ENVIRONMENT, MARKET SHARE, MARKET STRUCTURE, MEDIUM ENTERPRISES, MICRO ENTERPRISES, MORAL HAZARD, MORTGAGES, NATIONAL GUARANTEE, NEW MARKETS, NON-PERFORMING LOANS, OUTREACH, OVERDRAFTS, PARTIAL CREDIT, PAYMENT OBLIGATION, PAYMENTS IN ADVANCE, PENSION, PERSONAL GUARANTEE, POLITICAL ECONOMY, PORTFOLIO, PRIVATE BANKS, PRIVATE SECTOR LOANS, PROFITABILITY, PROMISSORY NOTES, PROPERTY RIGHTS, PROTECTION OF INVESTORS, PUBLIC BANKS, PUBLIC CREDIT, PUBLIC FUND, QUESTIONNAIRE, RECEIPT, RECEIPTS, RECESSION, REGIONAL BANKS, RELATIONSHIP LENDING, RESEARCH ASSISTANCE, RISK MANAGEMENT, RISK TAKING, RULE OF LAW, SALE, SALES, SCHOLARSHIPS, SECURITIES, SELF-FINANCING, SHAREHOLDERS, SMALL BANKS, SMALL BUSINESS, SMALL ENTERPRISE, SMALL ENTERPRISES, SMALL ENTREPRENEURS, TAX, TAX REDUCTIONS, TECHNICAL ASSISTANCE, TERM CREDIT, TERMS OF LOANS, TOTAL DEBT, TRADE FINANCING, TRAINING PROGRAMS, TRANSACTION, TRANSPARENCY, UNFAIR COMPETITION, UNSECURED LOANS, VARIABLE RATES, VARIABLE-RATE LOANS, WORKING CAPITAL,
Online Access:	http://documents.worldbank.org/curated/en/2008/12/10063846/drivers-obstacles-banking-smes-role-competition-institutional-framework http://hdl.handle.net/10986/6306
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