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Banking Market Concentration and Credit Availability to Small Businesses

Author

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  • Yongjin Park

    (Connecticut College)

Abstract

This paper examines how banking market concentration affects small business credit. Based on an idea that line-of-credit (L/C) limit and L/C balance provide useful proxies for credit supply to and credit demand of a firm, we examine the effect of bank concentration on L/C limits and L/C balances. Using Heckman selection models to correct for sample selection, bank concentration is found to lower limits of L/Cs, where there was no statistically significant difference in L/C balances. We also find that small firms in concentrated banking markets have lower overall institutional debt-to-asset ratios.

Suggested Citation

  • Yongjin Park, 2008. "Banking Market Concentration and Credit Availability to Small Businesses," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 12(3), pages 47-69, Summer.
    • Handle: RePEc:pep:journl:v:12:y:2008:i:3:p:47-69
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    Cited by:

    1. Jae-Seung Han & Sang-Yong Lee, 2013. "The impact of technology transfer contract on a firm’s market value in Korea," The Journal of Technology Transfer, Springer, vol. 38(5), pages 651-674, October.

    More about this item

    Keywords

    Banking ; Concentration ; Credit;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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