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Bank Size and Lending Specialisation

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  • Diana Bonfim
  • Qinglei Dai

Abstract

Using micro-level data on the entire population of business loans of a bank-based economy, we empirically test some of the core predictions of the SME financing literature, examining banks’ lending specializations in firm size and lending technologies. Rejecting the conventional belief that smaller banks focus more on relationship loans than do larger banks, we find that banks of different sizes dedicate similar proportions of loans to relationship lending. However, supporting the SME finance theories on the organizational advantages of small banks, we find that smaller banks provide more access to relationship loans to small firms, though such loans are usually more expensive.
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Suggested Citation

  • Diana Bonfim & Qinglei Dai, 2017. "Bank Size and Lending Specialisation," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 46(2), pages 329-380, July.
  • Handle: RePEc:bla:ecnote:v:46:y:2017:i:2:p:329-380
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    File URL: http://hdl.handle.net/10.1111/ecno.12082
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    Cited by:

    1. Fricke, Daniel & Roukny, Tarik, 2020. "Generalists and specialists in the credit market," Journal of Banking & Finance, Elsevier, vol. 112(C).
    2. Edoardo M. Acabbi & Ettore Panetti & Alessandro Sforza, 2019. "The Financial Channels of Labor Rigidities: Evidence from Portugal," GEE Papers 0138, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Dec 2019.
    3. Delis, Manthos & Hasan, Iftekhar & Tsionas, Efthymios, 2015. "Banks’ Risk Endogenous to Strategic Management Choices," MPRA Paper 64907, University Library of Munich, Germany.
    4. Delis, Manthos D. & Hasan, Iftekhar & Tsionas, Efthymios G., 2015. "Firms’ risk endogenous to strategic management choices," Research Discussion Papers 16/2015, Bank of Finland.
    5. repec:bof:bofrdp:urn:nbn:fi:bof-201508211363 is not listed on IDEAS

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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