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Industry Specialization and Small Business Lending

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  • Di, Wenhua
  • Pattison, Nathaniel

Abstract

This paper examines the rise and competitive impact of industry-specialized small business lenders. Using loan-level data with detailed industry codes from the Small Business Administration (SBA), we document a recent increase in lenders that originate loans nationally but to a limited number of industries. We then examine the impact of these industry-specialized lenders on credit availability and banking competition. Exploiting the staggered entry of a large, specialized lender, we find significant increases in total SBA-backed lending with no evidence of substitution from other lenders. We then explore potential mechanisms behind the increase in lending.

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  • Di, Wenhua & Pattison, Nathaniel, 2023. "Industry Specialization and Small Business Lending," Journal of Banking & Finance, Elsevier, vol. 149(C).
    • Handle: RePEc:eee:jbfina:v:149:y:2023:i:c:s0378426623000249
    DOI: 10.1016/j.jbankfin.2023.106797
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    More about this item

    Keywords

    Small Business Lending; Banking Competition; Specialization; Distance in Lending; Credit Access;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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