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Lending to Small and Medium-Sized Enterprises in Russian Regions: Effects of Banking System Reorganization

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  • Alina Nikolaevna Novopashina

    () (Economic Research Institute FEB RAS)

Abstract

The trend of the last decade is the closures of lending institutions and their branches by way of withdrawal of bank licenses in case of failure to meet the requirements for the adequacy and structure of equity and reserves, as well as the consolidation of bank assets in the form of mergers. The main object of this paper is to answer the following question: does the closure of banks and bank branches affects lending to small and medium-sized enterprises? To answer this question we used panel data on the loans granted to small and medium-sized enterprises and the closure of banks and bank branches in the Russian regions in 2010–2016. This research shows that the effect of bank closures on lending to SMEs in the Russian regions is ambiguous. On the one hand, the estimates show the negative effect of bank closures on the loans. On the other, there is no evidence of a statistically significant link between the closure of bank branches and lending to small and medium-sized enterprises in the Russian regions in the year following the closure. The findings also reveal that the closure of banks does not lead to the concentration of lending to small and medium-sized enterprises in the largest banks but is associated with shrinking of there loans to SMEs

Suggested Citation

  • Alina Nikolaevna Novopashina, 2020. "Lending to Small and Medium-Sized Enterprises in Russian Regions: Effects of Banking System Reorganization," Spatial Economics=Prostranstvennaya Ekonomika, Economic Research Institute, Far Eastern Branch, Russian Academy of Sciences (Khabarovsk, Russia), issue 1, pages 123-155.
  • Handle: RePEc:far:spaeco:y:2020:i:1:p:123-155
    DOI: https://dx.doi.org/10.14530/se.2020.1.123-155
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    References listed on IDEAS

    as
    1. Hannan, Timothy H., 1991. "Bank commercial loan markets and the role of market structure: evidence from surveys of commercial lending," Journal of Banking & Finance, Elsevier, vol. 15(1), pages 133-149, February.
    2. de la Torre, Augusto & Martínez Pería, María Soledad & Schmukler, Sergio L., 2010. "Bank involvement with SMEs: Beyond relationship lending," Journal of Banking & Finance, Elsevier, vol. 34(9), pages 2280-2293, September.
    3. Leonard I. Nakamura, 1994. "Small borrowers and the survival of the small bank: is mouse bank Mighty or Mickey?," Business Review, Federal Reserve Bank of Philadelphia, issue Nov, pages 3-15.
    4. S. Ageeva & A. Mishura., 2017. "Regional banking system in Russia: Trends and factors of spatial distribution," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 1.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    banks; bank branch; financial assistance to the banking system; regional banks; RF Central Bank; bank closure; small and medium-sized enterprises (SMEs); Russian regions;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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