Determinants of Bank Involvement with SMEs [electronic resource] : A Survey of Demand-Side and Supply-Side Factors /
Ekpu, Victor U.author.
This book is a comprehensive, yet concise text that brings together all aspects of SME banking theories and empirical studies in one text. The book contains the latest policy debates on money creation and credit rationing and the relative role of demand-side and supply-side factors affecting SME financing. Readers will understand the borrower-specific, lender-specific and business environment drivers of bank finance for SMEs as well as the determinants of loan contract terms, particularly the risk premium and collateral. Readers will also understand how loan officers acquire proprietary information on SMEs and apply various lending techniques, such as financial statement lending, relationship lending and credit scoring to the loan underwriting process. In addition, the book also features recent trends on the rise of alternative finance intermediaries such as online peer-to-peer lenders and the competitive implications for traditional banks providing loans to SMEs. Findings from this work will thus be of particular interest to commercial bankers, bank-dependent small business borrowers as well as policy makers, and researchers in central banks, development banks, development agencies and international financial institutions.
Description based upon print version of record.
Preface; Contents; Abstract; Part I  Introduction; 1 Bank Involvement with SMEs: Introduction; 1.1 Background and Overview; 1.2 Financing Options for SMEs; 1.3 Rationale for Bank Finance for SMEs; References; Part II  Theoretical Framework; 2 Theoretical Views on Money Creation and Credit Rationing; 2.1 Loanable Funds Theory Versus Post-Keynesian Endogenous Money Theory; 2.2 Information Asymmetry and Credit Rationing; 2.2.1 The New-Keynesian Theory---The Stiglitz and Weiss (S-W) Model; 2.2.2 The Post-Keynesian Theory of Credit Rationing; References
3 A Simplified Model of Adverse Selection in Loan Markets3.1 Solution of the Model Under Perfect Information; 3.1.1 Intuitions; 3.2 Solution of the Model Under Asymmetric Information; 3.3 Tools to Help Solve Adverse Selection Problems; 3.4 Tools to Help Solve Moral Hazard Problems; 3.5 Credit Rationing and the Use of Loan Commitments; References; Part III  Determinants of Credit Availabilityto SMEs; 4 Demand-Side Factors Affecting Bank Lending to SMEs; 4.1 Firm Characteristics; 4.1.1 Firm Size; 4.1.2 Firm's Age/Transparency; 4.1.3 Firm Profitability/Financial Performance
4.1.4 Financial Stability (Leverage and Liquidity)4.1.5 Firm's Organisational Form; 4.1.6 Nature of Business of Firm's Industrial Sector; 4.1.7 Firm's Credit Rating; 4.2 Owner Characteristics; 4.2.1 Owner/Entrepreneur's Credit Rating; 4.2.2 Owners' Educational Attainment; 4.2.3 Owners' Business Experience; 4.2.4 Owner's Equity Stake/Contribution; 4.2.5 Owner's Personal Wealth; 4.2.6 Owner's Physical/Social Characteristics (e.g. Age, Gender, Race, and Nationality); 4.3 Firm-Lender Relationship Characteristics; 4.3.1 Deposit Relationship; 4.3.2 Loan Relationship
4.3.3 Financial Management Relationship4.3.4 The Length and Exclusivity of Relationship; 4.3.5 Distance and Mode of Interaction; 4.3.6 Effects of Relationships on the Availability of Credit; 4.4 Demand Side Market Failures; 4.4.1 Availability of Marketable Collateral; 4.4.2 Strength of Borrowers' Balance Sheet; 4.4.3 Information Market Failures; 4.4.4 Business Confidence; 4.4.5 Poor Quality of Projects; 4.4.6 Inability to Exploit Existing Opportunities; References; 5 Supply-Side Factors Affecting Bank Lending to SMEs; 5.1 Risk and Cost Factors; 5.1.1 Cost of Funds
5.1.2 Informational Asymmetries5.1.3 Lenders' Risk Appetite; 5.1.4 Transaction Costs; 5.2 Financial Institution and Market Structure; 5.2.1 Bank Size and Organizational Structure; 5.2.2 Ownership Structure; 5.2.3 Effect of Bank Consolidation; 5.2.4 Effect of Bank Market Structure and Competition; 5.2.5 The Profitability Incentive; 5.3 Lending Technology; 5.3.1 Relationship Lending; 5.3.1.1 Benefits of Relationship Lending; 5.3.1.2 Costs of Relationship Lending; 5.3.2 Small Business Credit Scoring (SBCS); 5.3.2.1 Advantages of Credit Scoring; 5.3.2.2 Pitfalls of Credit Scoring
5.3.2.3 Credit Scoring Versus Relationship Lending: The Role of Organizational Structure
Includes bibliographical references at the end of each chapters.
This book is a comprehensive, yet concise text that brings together all aspects of SME banking theories and empirical studies in one text. The book contains the latest policy debates on money creation and credit rationing and the relative role of demand-side and supply-side factors affecting SME financing. Readers will understand the borrower-specific, lender-specific and business environment drivers of bank finance for SMEs as well as the determinants of loan contract terms, particularly the risk premium and collateral. Readers will also understand how loan officers acquire proprietary information on SMEs and apply various lending techniques, such as financial statement lending, relationship lending and credit scoring to the loan underwriting process. In addition, the book also features recent trends on the rise of alternative finance intermediaries such as online peer-to-peer lenders and the competitive implications for traditional banks providing loans to SMEs. Findings from this work will thus be of particular interest to commercial bankers, bank-dependent small business borrowers as well as policy makers, and researchers in central banks, development banks, development agencies and international financial institutions.
Finance.
Entrepreneurship.
Macroeconomics.
Finance, general.
Entrepreneurship.
Macroeconomics/Monetary Economics//Financial Economics.