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Who Furls the Umbrella on Rainy Days? The Role of Bank Ownership Type and Bank Size in SME Lending

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  • Chung-Hua Shen
  • Haumin Chu
  • Yu-Chun Wang
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    Abstract

    Using Taiwanese bank-level loan data, this paper examines the changes during the three recent recessions in the granting of loans to small and medium-size enterprises (SMEs) by privately owned banks (POBs), government-owned banks (GOBs), and foreign-owned banks (FOBs). The effects of bank size on SME lending are also examined. The behavior of cutting lending during the recession is referred to as "furling the umbrella on rainy days." The behavior is found for FOBs during the last recession (covering the subprime crisis) but not for GOBs and POBs. On the contrary, GOBs even significantly increased SME lending during the crisis period. Finally, large banks make more SME loans than do small banks in both tranquil and crisis times in this study.

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    File URL: http://mesharpe.metapress.com/link.asp?target=contribution&id=W1RJ4G1P34126873
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    Bibliographic Info

    Article provided by M.E. Sharpe, Inc. in its journal Emerging Markets Finance and Trade.

    Volume (Year): 48 (2012)
    Issue (Month): 0 (July)
    Pages: 184-199

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    Handle: RePEc:mes:emfitr:v:48:y:2012:i:0:p:184-199

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    Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=111024

    Related research

    Keywords: bank ownership; bank size; financial crisis; recession; SME lending;

    References

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