Bank Lending to Small Businesses in Latin America : Does Bank Origin Matter?
In recent years foreign bank participation has increased tremendously in Latin America. Some observers argue that foreign bank entry will benefit Latin American banking systems by reducing the volatility of loans and deposits and increasing efficie...
| Main Authors: | , , , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2002/01/1687153/bank-lending-small-businesses-latin-america-bank-origin-matter http://hdl.handle.net/10986/15722 |
| Summary: | In recent years foreign bank
participation has increased tremendously in Latin America.
Some observers argue that foreign bank entry will benefit
Latin American banking systems by reducing the volatility of
loans and deposits and increasing efficiency. Others are
concerned that foreign banks might choose to extend credit
only to certain customers, leaving some sectors-such as
small businesses-unserved. The authors examine this issue.
Using bank-level data for Argentina, Chile, Colombia, and
Peru during the mid-1990s, they empirically investigate
whether bank origin affects the share and growth rate of
bank lending to small businesses. They find that although
foreign banks generally lent less to small businesses (as
share of total lending) than private domestic banks, the
difference is due primarily to the behavior of small foreign
banks. The difference was considerably smaller for large and
medium-sized banks. And in Chile and Colombia, large foreign
banks might actually lend slightly more (as share of total
lending) than large domestic banks. |
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