Small business credit availability: how important is size of lender?
The recent relaxation of restrictions on interstate banking and branching, as well as the likely relaxation of Glass-Steagall restrictions, should encourage significant consolidation in the banking industry. Larger lenders, diversified across regions and products, will undoubtedly be less susceptible to adverse economic shocks that have buffeted the banking industry over the past decade. However, as small banks with a small business loan emphasis are absorbed into larger, more diversified lenders, which tend to focus much less on small business lending, credit availability to bank-dependent small business borrowers should be a major public policy concern. In New England, the evidence indicates that many large acquirers have chosen not to maintain the small business loan portfolios of their smaller target banks. This reduction in small business lending as a result of acquisitions indicates that many banks have little interest in maintaining the historical lending relationships fostered by the small target banks. As consolidation reduces the number of small banks that focus on small business loans, some niches will be created that can be served by de novo entry, although the evidence suggests that de novo entry is unlikely to quickly fill any major voids in small business lending.
|Date of creation:||1995|
|Date of revision:|
|Publication status:||Published in Universal Banking Financial System Design Reconsidered (A. Saunders and I. Walter, eds.) 628-55 (1996).|
|Contact details of provider:|| Postal: |
Web page: http://www.bos.frb.org/
More information through EDIRC
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gregory E. Elliehausen & John D. Wolken, 1990.
"Banking markets and the use of financial services by small and medium- sized businesses,"
160, Board of Governors of the Federal Reserve System (U.S.).
- Gregory E. Elliehausen & John D. Wolken, 1990. "Banking markets and the use of financial services by small and medium- sized businesses," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Oct, pages 801-817.
- Joe Peek & Eric S. Rosengren, 1995. "Banks and the availability of small business loans," Working Papers 95-1, Federal Reserve Bank of Boston.
- Allen N. Berger & Gregory F. Udell, 1999.
"Lines of Credit and Relationship Lending in Small Firm Finance,"
- Allen N. Berger & Gregory F. Udell, 1994. "Lines of credit and relationship lending in small firm finance," Proceedings 52, Federal Reserve Bank of Chicago.
- Allen Berger & Gregory Udell, 1994. "Lines of Credit and Relationship Lending in Small Firm Finance," Center for Financial Institutions Working Papers 94-11, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Allen N. Berger & Gregory E. Udell, 1994. "Lines of Credit and Relationship Lending in Small Firm Finance," Economics Working Paper Archive wp_113, Levy Economics Institute.
- John H. Boyd & Stanley L. Graham, 1991. "Investigating the banking consolidation trend," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-15.
- Cornett, Marcia Millon & Tehranian, Hassan, 1992. "Changes in corporate performance associated with bank acquisitions," Journal of Financial Economics, Elsevier, vol. 31(2), pages 211-234, April.
- Joe Peek & Eric Rosengren, 1993.
"Bank regulation and the credit crunch,"
93-2, Federal Reserve Bank of Boston.
When requesting a correction, please mention this item's handle: RePEc:fip:fedbwp:95-5. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Catherine Spozio)
If references are entirely missing, you can add them using this form.