Does Market Size Structure Affect Competition? The Case of Small Business Lending

By Allen N. Berger, Richard J. Rosen, Greg Udell. 2007

161 citations recorded by the source corpus.

Market size structure refers to the distribution of shares of different size classes of local market participants, where the sizes are inclusive of assets both within and outside the local market. We apply this new measure of market structure in two empirical analyses of the U.S. banking industry to address concerns regarding the effects of the consolidation in banking. Our quantity analysis of the likelihood that small businesses borrow from large versus small banks and our small business loan price analysis that includes market size structure as well as conventional measures yield very different findings from most of the literature on bank size and small business lending. Our results do not suggest a significant net advantage or disadvantage for large banks in small business lending overall, or in lending to informationally opaque small businesses in particular. We argue that the prior research that excluded market size structure may be misleading and offer some likely explanations of why our results differ.

Subfields: Accounting, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/614519418d0f29a8ac993822a8c8fea74b2d558b

Citations in the corpus

Do Small Businesses Still Prefer Community Banks (2013, unknown): “Empirical results in Berger, Rosen, and Udell (2007) do not suggest a significant net advantage or disadvantage for large banks in small business lending overall, or in lending to informationally opaque small businesses in particular.”
A more complete conceptual framework for SME finance (2006, unknown): “Hannan 1991, Berger, Rosen, and Udell forthcoming ).”
Small and medium enterprises : a cross-country analysis with a new data set (2011, unknown): “However, some recent studies, including Berger and Udell (2006), Berger et al. (2007), de la Torre et al. (2010) and Beck et al. (2008b), have disputed this conviction by arguing that large banks, relative to other institutions, can have a comparative advantage in financing SMEs through arms-length…”
Competition and Relationship Lending: Friends or Foes? (2011, unknown): “A great number of studies, concerning diﬀerent countries, document that big banks devote to small business lending a lower share of their resources (Berger and Udell, 1996; Sapienza, 2002; Degryse et al. , 2009b) and that, in turn, small ﬁrms are more likely to borrow from small banks (Berger et al.”
Harming Depositors and Helping Borrowers: The Disparate Impact of Bank Consolidation (2009, unknown): “Berger, Rosen, and Udell (2007) examine lines of credit made to small businesses using the 1993 Survey of Small Business Finance (SSBF).”
Banks and Microbanks (2009, unknown): “While large banks devote a lower share of assets to small business loans, recent evidence suggests that their lending to small firms is roughly in proportion to their presence in a local market (Berger, Rosen, and Udell, 2007).”
COLLATERAL AND CREDIT RATIONING: A REVIEW OF RECENT EMPIRICAL STUDIES AS A GUIDE FOR FUTURE RESEARCH (2009, unknown): “First, the consolidation of financial institutions would result in an increased use of transactions lending technologies based on objective information (Berger and Udell, 2006; Berger et al., 2007).”