Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212297 
Year of Publication: 
2014
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 22/2014
Publisher: 
Bank of Finland, Helsinki
Abstract: 
In this paper, by employing a novel approach, we study the relationship between bank type and small-business lending in a post-transition country. Using a unique dataset on bank branches and firm-level data, we find that local cooperative banks lend more to small businesses than do large domestic banks and foreign-owned banks, even when controlling for the financial situation of the cooperative banks. Additionally, our results suggest that cooperative banks provide loans to small businesses at lower costs than foreign-owned banks or large domestic banks. Finally, we show that small and medium-sized firms perform better in counties with a large number of cooperative banks than in counties dominated by foreign-owned banks or large domestic banks. Our results are important from a policy perspective, as they show that foreign bank entry and industry consolidation may raise valid concerns for small firms in developing countries.
Subjects: 
small-business lending
cooperative banks
foreign banks
post-transition countries
JEL: 
G21
G28
Persistent Identifier of the first edition: 
ISBN: 
978-952-6699-96-7
Document Type: 
Working Paper

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