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Financing small businesses in France

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  • Dietsch, Michel

    ()
    (Robert Schuman University Strasbourg)

Abstract

This paper explores empirically the effect of consolidation in the French banking industry and of Basel II on the availability of credit for small and medium-sized enterprises (SMEs). Consolidation has been associated with an increase in the number of banks the average firm borrows from and this has improved credit availability. Furthermore, the paper shows, for France, that the current Basel II proposal would result in lower capital charges on SME loans due to portfolio diversification effects and low default correlations of SMEs. It also argues that the current Basel II proposal is conservative: capital charges could be even lower if they were based on our estimates of SME loan portfolio risk. Overall, in France, credit rationing of SMEs does not seem to be a serious problem and Basel II is unlikely to hold back SME lending.

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Bibliographic Info

Paper provided by European Investment Bank, Economics Department in its series EIB Papers with number 9/2003.

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Length: 28 pages
Date of creation: 09 Jun 2003
Date of revision:
Handle: RePEc:ris:eibpap:2003_009

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Related research

Keywords: French banking industry; Basel II; Credit availability; SMEs; SME lending; Capital charges;

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References

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  1. Enrica Detragiache & Paolo Garella & Luigi Guiso, 2000. "Multiple versus Single Banking Relationships: Theory and Evidence," Journal of Finance, American Finance Association, American Finance Association, vol. 55(3), pages 1133-1161, 06.
  2. Thakor, Anjan V, 1996. " Capital Requirements, Monetary Policy, and Aggregate Bank Lending: Theory and Empirical Evidence," Journal of Finance, American Finance Association, American Finance Association, vol. 51(1), pages 279-324, March.
  3. Élisabeth Kremp & Michel Dietsch, 1998. "Le crédit interentreprises bénéficie plus aux grandes entreprises qu'aux PME," Économie et Statistique, Programme National Persée, Programme National Persée, vol. 314(1), pages 25-37.
  4. Dietsch, Michel & Petey, Joel, 2002. "The credit risk in SME loans portfolios: Modeling issues, pricing, and capital requirements," Journal of Banking & Finance, Elsevier, Elsevier, vol. 26(2-3), pages 303-322, March.
  5. Michael B. Gordy, 1998. "A comparative anatomy of credit risk models," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 1998-47, Board of Governors of the Federal Reserve System (U.S.).
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Citations

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Cited by:
  1. Brick, Ivan E. & Palia, Darius, 2007. "Evidence of jointness in the terms of relationship lending," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 16(3), pages 452-476, July.
  2. Memmel, Christoph & Schmieder, Christian & Stein, Ingrid, 2008. "Relationship Lending - Empirical Evidence For Germany," Economic and Financial Reports, European Investment Bank, Economics Department 2008/1, European Investment Bank, Economics Department.
  3. Tlili, Rim, 2012. "Comment justifier la multibancarité au sein des PME ?," Economics Thesis from University Paris Dauphine, Paris Dauphine University, Paris Dauphine University, number 123456789/10919 edited by Etner, François.
  4. Christian Schmieder & Katharina Marsch & Katrin Forster-van Aerssen, 2010. "Does banking consolidation worsen firms’ access to credit? Evidence from the German economy," Small Business Economics, Springer, Springer, vol. 35(4), pages 449-465, November.
  5. Michel Dietsch, 2003. "De Bâle II vers Bâle III : les enjeux et les problèmes du nouvel Accord," Revue d'Économie Financière, Programme National Persée, Programme National Persée, vol. 73(4), pages 325-342.
  6. Céline Meslier & Philippe Rous & Alain Sauviat & Pascale Torre, 2013. "Structure bancaire locale et évolution du crédit à l'échelle des départements français : l'expérience de la crise financière de 2007-2008," Working Papers, HAL hal-00929424, HAL.
  7. Djedidi-Kooli, Salima, 2009. "L’accès au financement des PME en France : quel rôle joué par la structure du système bancaire ?," Economics Thesis from University Paris Dauphine, Paris Dauphine University, Paris Dauphine University, number 123456789/8354 edited by Etner, François.
  8. Fabrizio Fabi & Sebastiano Laviola & Paolo Marullo Reedtz, 2004. "The treatment of SMEs loans in the New Basel Capital Accord: some evaluations," BNL Quarterly Review, Banca Nazionale del Lavoro, Banca Nazionale del Lavoro, vol. 57(228), pages 29-70.
  9. Fabrizio Fabi & Sebastiano Laviola & Paolo Marullo Reedtz, 2004. "The treatment of SMEs loans in the New Basel Capital Accord: some evaluations," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, Banca Nazionale del Lavoro, vol. 57(228), pages 29-70.
  10. Wagenvoort, Rien, 2003. "BANK SURVEY EVIDENCE ON "BANK LENDING TO SMEs IN THE EUROPEAN UNION"," Economic and Financial Reports, European Investment Bank, Economics Department 2003/1, European Investment Bank, Economics Department.
  11. Gajewski, Krzysztof & Pawłowska, Małgorzata & Rogowski, Wojciech, 2012. "Relacje firm z bankami w Polsce w świetle danych ze sprawozdawczości bankowej
    [Bank-firm relationships in Poland in the light of data from bank reporting]
    ," MPRA Paper 42544, University Library of Munich, Germany, revised 29 Oct 2012.
  12. Marsch, Katharina & Schmieder, Christian & Forster-van Aerssen, Katrin, 2007. "Banking consolidation and small businessfinance: empirical evidence for Germany," Discussion Paper Series 2: Banking and Financial Studies 2007,09, Deutsche Bundesbank, Research Centre.
  13. Gómez-González, José Eduardo & Reyes, Nidia Ruth, 2011. "The number of banking relationships and the business cycle: New evidence from Colombia," Economic Systems, Elsevier, Elsevier, vol. 35(3), pages 408-418, September.

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