Bank Involvement with SMEs : Beyond Relationship Lending

The "conventional wisdom" in academic and policy circles argues that, while large and foreign banks are generally not interested in serving SMEs, small and niche banks have an advantage in doing so because they can overcome SME opaqueness through relationship lending. This paper shows that there is a gap between this view and what banks actually do. Banks perceive SMEs as a core and strategic business and seem well positioned to expand their links with SMEs. The recent intensification of bank involvement with SMEs in various emerging markets documented in this paper is neither led by small or niche banks nor highly dependent on relationship lending. Rather, all types of banks are catering to SMEs and larger, multiple-service banks have in fact a comparative advantage in offering a wide range of products and services on a large scale, through the use of new technologies, business models, and risk management systems.

Bibliographic Details

Main Authors:	de la Torre, Augusto, Martínez Pería, María Soledad, Schmukler, Sergio L.
Format:	Policy Research Working Paper biblioteca
Language:	English
Published:	World Bank, Washington, DC 2008-06
Subjects:	ACCESS TO CAPITAL, ACCESS TO CREDIT, ACCESS TO EXTERNAL FINANCE, ACCESS TO FINANCE, ACCOUNT MANAGEMENT, ACCOUNTING, ACCOUNTS RECEIVABLE, ADVISORY SERVICES, AFFORDABLE INTEREST RATES, AGRICULTURAL SECTOR, APPROVAL PROCESS, ASYMMETRIC INFORMATION, BAD DEBTS, BANK ASSETS, BANK COMPETITION, BANK CONSOLIDATION, BANK CREDIT, BANK DEPOSIT, BANK EXPOSURE, BANK FINANCING, BANK INVOLVEMENT, BANK LENDING, BANK OFFICIALS, BANKING INDUSTRIES, BANKING INDUSTRY, BANKING RELATIONSHIPS, BANKING SECTOR, BANKING SERVICES, BANKING SYSTEM, BANKRUPTCY, BANKRUPTCY PROCEDURES, BORROWER, BORROWING, BUSINESS ACTIVITY, BUSINESS CENTER, BUSINESS CENTERS, BUSINESS STRATEGY, BUYERS, CAPITAL MARKET, CAPITAL MARKETS, CASH MANAGEMENT, CENTRAL BANKS, CHECKING ACCOUNT, CHECKING ACCOUNTS, COLLATERAL, COMMERCIAL BANKING, COMMERCIAL FINANCE, COMMERCIAL LOAN, COMMUNITY BANKS, CONSOLIDATION, CONSUMER LENDING, CONTRACT ENFORCEMENT, CREDIT APPROVAL, CREDIT BUREAUS, CREDIT CARD, CREDIT CARDS, CREDIT DECISIONS, CREDIT GUARANTEES, CREDIT INFORMATION, CREDIT INSTITUTIONS, CREDIT LINE, CREDIT MARKET, CREDIT MARKETS, CREDIT PRODUCTS, CREDIT RATING, CREDIT REGISTRIES, CREDIT REPORTING, CREDIT RISK, CREDIT RISK MANAGEMENT, CREDIT SCORING, CREDIT SCORING MODELS, CREDITOR, CREDITORS, CREDITWORTHINESS, CURRENT ACCOUNT, DEBIT CARDS, DEBT, DEBTORS, DEFAULT RISK, DEPOSIT, DEPOSIT ACCOUNT, DEPOSIT PRODUCTS, DEPOSITS, DEVELOPMENT BANK, DISCLOSURE REQUIREMENTS, DIVERSIFICATION, ECONOMIC ACTIVITY, ECONOMIC DEVELOPMENT, ECONOMIES OF SCALE, EMERGING MARKETS, EMPLOYEE, EMPLOYMENT, ENTREPRENEURS, EQUITY FINANCING, EUROPEAN CENTRAL BANK, EXTERNAL FINANCE, FACTORING, FAMILIES, FEDERAL RESERVE, FEDERAL RESERVE BANK, FEDERAL RESERVE BANK OF NEW YORK, FEDERAL RESERVE SYSTEM, FINANCIAL ACTIVITY, FINANCIAL CONSTRAINTS, FINANCIAL DEVELOPMENT, FINANCIAL INSTITUTION, FINANCIAL INSTITUTIONS, FINANCIAL INTERMEDIATION, FINANCIAL MARKETS, FINANCIAL PRODUCTS, FINANCIAL RATIOS, FINANCIAL SERVICES, FINANCIAL STABILITY, FINANCIAL SYSTEM, FINANCING OBSTACLES, FISCAL POLICIES, FIXED COSTS, FOREIGN BANKS, FOREIGN EXCHANGE, FORMS OF COLLATERAL, FUTURE CASH FLOW, GROUP OF BANKS, HUMAN CAPITAL, INFORMAL CREDIT, INFORMATION SHARING, INFORMATION TECHNOLOGY, INSURANCE, INTANGIBLE ASSETS, INTEREST RATE, INTEREST RATES, INTERNATIONAL BANK, INTERNATIONAL BANKS, INTERNATIONAL FINANCE, LACK OF ACCESS, LARGE BANK, LARGE BANKS, LARGE COMPANIES, LARGE FIRMS, LAWS, LENDER, LENDERS, LENDING PORTFOLIO, LINES OF CREDIT, LIQUID ASSETS, LOAN, LOAN APPLICANT, LOAN APPLICATION, LOAN CONTRACT, LOAN OFFICER, LOAN PERFORMANCE, LOAN PORTFOLIOS, LOAN PRODUCTS, LOAN SIZE, LOCAL FINANCIAL INSTITUTIONS, LONG-TERM LENDING, MACROECONOMIC STABILITY, MANAGEMENT INFORMATION SYSTEMS, MEDIUM ENTERPRISES, MICRO ENTERPRISE, MICRO ENTERPRISES, MONEY TRANSFERS, MORAL HAZARD, NATIONAL BANKERS, NET WORTH, NEW BUSINESS, NEW ENTRANTS, OESTERREICHISCHE NATIONALBANK, ONLINE BANKING, ONLINE SALE, OPAQUE SMALL BUSINESS, OPAQUE SMALL BUSINESSES, OPERATING COSTS, PARTIAL CREDIT, POLICY ENVIRONMENTS, PRIVATE BANKS, PRIVATE EQUITY, PRIVATE SECTOR LOANS, PROBABILITY, PROFITABILITY, PROPERTY RIGHTS, PUBLIC BANKS, QUESTIONNAIRES, RATING SYSTEMS, REAL ESTATE, REPAYMENT, REPAYMENT HISTORY, RESEARCH ASSISTANCE, RISK MANAGEMENT, RISK PREMIUM, SAVINGS, SAVINGS ACCOUNTS, SAVINGS PRODUCTS, SECURITIES, SENIOR, SMALL BANK, SMALL BANKS, SMALL BUSINESS, SMALL BUSINESS BORROWERS, SMALL BUSINESS CREDIT, SMALL BUSINESS FINANCE, SMALL BUSINESS FINANCES, SMALL BUSINESS LENDING, SMALL BUSINESS LOANS, SMALL ENTERPRISES, SMALL LOANS, SOURCES OF INCOME, SPECIALIZED BANKS, START-UPS, STATISTICAL ANALYSES, SUBSIDIARIES, SUPPLY CHAINS, TAX COMPLIANCE, TERM CREDIT, TRADE CREDIT, TRADE FINANCING, TRANSACTION, TRANSACTION COSTS, UNIVERSAL BANKING, UNIVERSAL BANKS, WORKING CAPITAL,
Online Access:	http://documents.worldbank.org/curated/en/2008/06/9570362/bank-involvement-smes-beyond-relationship-lending http://hdl.handle.net/10986/6670
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