Bank Lending to Small Businesses in Latin America: Does Bank Origin Matter?

By George R. G. Clarke, Robert J. Cull, Maria Martinez Peria, S. Sanchez. 2002

238 citations recorded by the source corpus.

Recently, foreign bank participation has increased significantly in developing countries, fueling concerns that foreign banks might extend credit only to certain sectors, leaving customers like small businesses unattended. Using bank-level data for four Latin American countries during the mid-1990s, we investigate whether bank origin affects the share and growth of lending to small businesses. While, on average, foreign banks seem to lend less to small businesses, regression results reveal significant differences between small and large foreign banks. In general, we find that the latter surpass large domestic banks in their share and growth of lending to small businesses.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/7b3e0db4f68da5d62a55a5f6c0fb56c0cd05c34f

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. Robert J. Cull
2. María Soledad Martínez Pería
3. E. Detragiache
4. Poonam Gupta
5. Thorsten Beck
6. George R. G. Clarke
7. Stijn Claessens
8. N. R. Zagha

In Finance

1. María Soledad Martínez Pería
2. Robert J. Cull
3. E. Detragiache
4. Thorsten Beck
5. Asli Demirgüç-Kunt
6. Stijn Claessens
7. T. Tressel
8. Poonam Gupta

Citations in the corpus

• Foreign bank participation and access to credit across firms in developing countries (2006, background): “Finally, based on the experience of four Latin American countries, Clarke et al. (2005) obtain more nuanced results.”
• Economic growth in the 1990s : learning from a decade of reform (2005, background): “• Access to credit is growing in some countries,from foreign banks (Clarke et al. 2004), new domestic banks, and bank-like intermediaries.”
• Does Foreign Bank Penetration Reduce Access to Credit in Developing Countries? Evidence from Asking Borrowers (2001, unknown): “Looking at a larger set of countries, Clarke et al. (2001) find that foreign banks in Argentina, Chile, Colombia, and Peru generally lent a smaller fraction of their funds to SMEs than similar domestic banks in the late 1990s.”
• Foreign Banks in Poor Countries: Theory and Evidence (2008, background): “On the other hand, a study of lending behavior in four Latin American countries concludes that foreign banks lend less to SMEs than domestic banks on average, although this is not true for foreign banks that have a large presence in the country (Clarke et al., 2005).”