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Are Smes More Confortable With Small Domestic Lenders? (I -The Literature)

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  • Badulescu Daniel

    ()
    (University of Oradea, Faculty of Economic Sciences)

  • Petria Nicolae

    (Lucian Blaga University of Sibiu, Faculty of Economic Sciences)

Abstract

Small and medium enterprises (SMEs) are recognized having an important role in economic development, but this recognition doesnâ€(tm)t resolve the essential problems of the SME sector. We found that one of these are the problems of insufficient or inadequate funding, the lack of availability of financial institutions or private equity investors to meet the SMEs financing requirements. The need for financing of SMEs is predominantly covered by bank loans, but it is difficult to say if this demand finds an appropriate offer, in amount and structure. Thus, it is important to understand if the role of lending techniques and organizational structures of the banks, types and origin of the owners (state, private, domestic or foreign) or the size and the market power (large, small, local, or niche banks) individualizes the banks offer and if the banks know the best way to mitigate the demand and supply constraint. Even though the traditional view explains the strategic predisposition of large banks to finance their clients(by default large clients, corporations) through transactional lending and, and local/domestic banks use the relationship lending- suitable to small customers (SMEs), however, the more recent opinions show that the large international banks use a combination of methods and techniques to gain favorable position on SMEs segments.

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Bibliographic Info

Article provided by University of Oradea, Faculty of Economics in its journal The Journal of the Faculty of Economics - Economic.

Volume (Year): 1 (2012)
Issue (Month): 1 (July)
Pages: 493-499

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Handle: RePEc:ora:journl:v:1:y:2012:i:1:p:493-499

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Keywords: SMEs lending; large banks; foreign banks;

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References

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  1. Mitchell A. Petersen & Raghuram G. Rajan, 1996. "Trade Credit: Theories and Evidence," NBER Working Papers 5602, National Bureau of Economic Research, Inc.
  2. Jeremy C. Stein, 2002. "Information Production and Capital Allocation: Decentralized versus Hierarchical Firms," Journal of Finance, American Finance Association, vol. 57(5), pages 1891-1921, October.
  3. Allen N. Berger & Gregory F. Udell, 2001. "Small business credit availability and relationship lending: the importance of bank organizational structure," Finance and Economics Discussion Series 2001-36, Board of Governors of the Federal Reserve System (U.S.).
  4. Cressy, Robert & Olofsson, Christer, 1997. " European SME Financing: An Overview," Small Business Economics, Springer, vol. 9(2), pages 87-96, April.
  5. Ralph de Haas & Ilko Naaborg, 2005. "Does Foreign Bank Entry Reduce Small Firms' Access to Credit? Evidence from European Transition Economies," DNB Working Papers 050, Netherlands Central Bank, Research Department.
  6. Ginés Hernández-Cánovas & Pedro Martínez-Solano, 2010. "Relationship lending and SME financing in the continental European bank-based system," Small Business Economics, Springer, vol. 34(4), pages 465-482, May.
  7. Badulescu Daniel & Petria Nicolae, 2011. "Collateral'S Importance In Smes Financing: What Is The Banks' Response? Some Evidence For Romania," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 256-260, July.
  8. Daniel BĂDULESCU, 2010. "SMEs Financing: the Extent of Need and the Responses of Different Credit Structures," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 7(7(548)), pages 25-36, July.
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