Determinants of Bank Involvement with SMEs
Determinants of Bank Involvement with SMEs

Author: Victor U. Ekpu

Publisher: Springer

Published: 2015-12-23

Total Pages: 99

ISBN-13: 3319258370

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This book is a comprehensive, yet concise text that brings together all aspects of SME banking theories and empirical studies in one text. The book contains the latest policy debates on money creation and credit rationing and the relative role of demand-side and supply-side factors affecting SME financing. Readers will understand the borrower-specific, lender-specific and business environment drivers of bank finance for SMEs as well as the determinants of loan contract terms, particularly the risk premium and collateral. Readers will also understand how loan officers acquire proprietary information on SMEs and apply various lending techniques, such as financial statement lending, relationship lending and credit scoring to the loan underwriting process. In addition, the book also features recent trends on the rise of alternative finance intermediaries such as online peer-to-peer lenders and the competitive implications for traditional banks providing loans to SMEs. Findings from this work will thus be of particular interest to commercial bankers, bank-dependent small business borrowers as well as policy makers, and researchers in central banks, development banks, development agencies and international financial institutions.

Commercial banks in economic development of SMEs. An analysis of their contribution
Commercial banks in economic development of SMEs. An analysis of their contribution

Author: Hitiyise Samuel

Publisher: GRIN Verlag

Published: 2021-08-04

Total Pages: 58

ISBN-13: 3346459128

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Bachelor Thesis from the year 2021 in the subject Business economics - Investment and Finance, grade: second class upper division, , course: Accounting, language: English, abstract: The study was guided by analyzing the contribution of commercial banks in economic development of SMEs The target population for the study consisted of registered SMEs in KCBR as their clients.A descriptive research design as well as an explanatory research design was used. The study used Bouchard formula to sample SMEs and then used random sampling to select the 105 SMEs. The respondents of the study were the owners and managers of the SMEs. The study used questionnaires to collect quantitative data using closed ended questions . Data analysis will be done using SPSS statistical software version 21. Descriptive statistics (Frequencies, Means and Standard deviation) and inferential statistics (Correlations and regression) were used in analysis. A multiple linear regression model was used for analysis and all tests were conducted at 5% level of significance. The study findings indicated that banking services are positively related with economic development of SMEs. The study concluded that commercial banks in Nyarugenge district are favorable. The study also concluded commercial bank services are effective and they economic development of SMEs significantly. SMEs in Rwanda suffer from weak financial performance and a high failure rate. Scholars argue that judging by the poor economic development of the informal sector, not much progress seems to have been achieved, despite government efforts to promote SME activity. Some of the key factors attributed to this poor performance is access to financial services. Therefore, the purpose of this study was to examine the contribution of commercial banks in economic development of SMEs Normally, SMES play vital and significant contributors to economic development through their critical role in providing job opportunities and reducing poverty levels, an estimated number of up to 40% of the start-ups SMEs fail by year 2 and at least 60% close their doors by year 4. This menace is attributed to poor financial management among small businesses. Accessing credit is a major constraint to the economic development and growth of SMEs and also to poor rural and urban households. This is mainly due to the behavior of lenders in terms of hedging against borrowers’ risks by demanding collateral, which they lack, and also information asymmetry.

Multiple Banking Relationships
Multiple Banking Relationships

Author: Catherine Refait-Alexandre

Publisher:

Published: 2016

Total Pages: 40

ISBN-13:

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This article focuses on the use of multiple banking relationships by SMEs, a key issue given their strong dependence on bank financing in a context of increasing financial constraints and higher risk of credit rationing since the crisis. We investigate whether the use of multiple banking relationships is explained by firms' characteristics or by the quality of the banking relationship. We exploit the results of an original survey conducted on a sample of French SMEs in December 2012. According to the traditional theoretical framework of multiple banking, we find that older, bigger, and better-performing firms are more likely to access multiple banking relationships. We further find that innovative firms are more likely to engage in multiple banking relationships. We also highlight the explanatory power of an alternative model based on the quality of banking relationship: when the manager trusts its main bank, or when he is closer to his loan officer, the firm will be less likely to engage in multiple banking relationships.

Microenterprises and Multiple Bank Relationships
Microenterprises and Multiple Bank Relationships

Author: Doris Neuberger

Publisher:

Published: 2006

Total Pages:

ISBN-13:

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An overview of previous evidence about relationship banking to SMEs shows that multiple banking relationships prevail even at small firms, but there is hardly evidence on the number of banking relationships held by micro firms. To close this gap, we use data from a survey conducted among professionals in Germany in 2002. Being self-employed persons acting in the services sector, professionals are mostly informationally opaque micro firms. To explain the number of their banking relationships, we investigate characteristics of the firm and its loan demand, characteristics of the housebank and its relationship to the borrower, and variables of bank market structure and regulation. Consistent with the theory of asymmetric information, we find that these firms hold a small number of bank relationships, which increases in firm size and age. An increase in the duration or importance of the housebank relationship does not induce multiple banking relationships as predicted by the hold-up theory. Professionals rather tend to hold multiple banking relationships to increase their credit availability and finance larger loans. The type of the housebank and local banking market concentration do not seem to matter. All in all, the results indicate that multiple bank relationships help to overcome credit rationing.

Bank Ownership
Bank Ownership

Author: Robert Cull

Publisher: International Monetary Fund

Published: 2017-03-22

Total Pages: 49

ISBN-13: 1475588127

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This paper presents recent trends in bank ownership across countries and summarizes the evidence regarding the implications of bank ownership structure for bank performance and competition, financial stability, and access to finance. The evidence reviewed suggests that foreign-owned banks are more efficient than domestic banks in developing countries, promote competition in host banking sectors, and help stabilize credit when host countries face idiosyncratic shocks. But there are tradeoffs, since foreign-owned banks can transmit external shocks and might not always expand access to credit. The record on the impact of government bank ownership suggests few benefits, especially for developing countries.

What Determines the Number of Bank Relationships? Cross-Country Evidence
What Determines the Number of Bank Relationships? Cross-Country Evidence

Author: Steven Ongena

Publisher:

Published: 1998

Total Pages: 51

ISBN-13:

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We investigate the determinants of multiple-bank relationships using a new data set comprised of 1129 firms across twenty European countries. We first document large cross-country variation in the average number of bank relationships per firm, exposing a richness in the financial systems of European countries that goes beyond simply being termed quot;bank-dominated.quot; We find, after controlling for firm and industry-specific characteristics, that the average number of bank relationships per firm is non-monotonically related to the fragility of a country?s banking system and negatively related to the efficiency of its bankruptcy process and enforcement of creditor rights. Moreover, we find that although concentrated banking systems reduce the number of bank relationships, public bond markets have a complementary effect and increase the average number of banks per firm. We extend our analysis to industry-level effects and also study the robustness of our results using a different data set on bank relationships in Norway. Overall, our study provides a rich set of results that should aid in sorting out theories in banking, corporate governance and financial system architecture.