Market size structure and small business lending: Are crisis times different from normal times?

Allen N. Berger, G.M. Cerqueiro, Maria Penas

Research output: Contribution to journalArticleScientificpeer-review

11 Citations (Scopus)

Abstract

Conventional wisdom holds that small banks have comparative advantages vis-à-vis large banks in serving small firms, while recent literature suggests this may not be the case. Using a panel of recent US start-ups, we investigate how small bank presence affects these firms in normal times (2004–06) and in the recent financial crisis (2007–09). We find that greater small bank presence yields significantly more lending to and slightly lower failure rates of these firms during normal times. However, these benefits disappear during the financial crisis, possibly because small banks are less diversified and benefit less from government guarantees than large banks.
Original languageEnglish
Pages (from-to)1965-1995
JournalReview of Finance
Volume19
Issue number5
DOIs
Publication statusPublished - Oct 2015

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