# **Endnotes**

I All figures on foreign control come from IMF (2000).

**2** In 2000, Chile's ratio of private sector credit to GDP was 66 percent. This figure was 26 percent for Peru, 23 percent for Argentina, and 19 percent for Colombia.

3 We also have data on lending to borrowers with less than UF I0,000 (roughly $300,000) and less than UF200,000 (roughly $6 million) in total debt. Empirical results are robust to altemative definitions of small business lending. 4 In the growth equations, we have no observations for large foreign banks in Peru because we lose data when computing annual growth rates.

5 In regressions not report here, we included each bank's market share and number of branches. These variables were highly collinear with SIZE, making it difficult to interpret our results. DeYoung _et al._ (1998) also find that the number of branches is not a significant determinant of small business lending when also controlling for size.

**6** Public banks in Argentina, Colombia, and Chile account for 30, 25, and 10 percent of banking assets, respectively. 7 We have no reason to expect that growth rates varied systematically over time. We compute growth rates relative to small business lending twelve months before. This process purges the growth rates of any seasonal trend.

8 Again, part of this stems from the short time period covered and the low number of banks, and part stems from our inability to merge the respective country datasets as described above.

**9** The F statistics for the tests that the coefficients on the two interaction terms for Argentina, Chile, Colombia and Peru are jointly zero are: F (2,1369) = 13.49; F (2,227) = 90.19; F (2,287) = 2.61; and F (2,230) = 11.46

**10** The F statistics for the tests that the coefficients on the two squared terms for Argentina, Chile, Colombia and Peru are jointly zero are: F (2,1369) = 5.26; F (2,227) = 75.90; F (2,287) = 2.61; and F (2,230) = 16.13.

" Estimated shares are calculated for banks between the **5h** and **9 5 h** percentile based upon size.

12 The dummy for public ownership remains negative for all three countries once we include size squared and we interact both size measures by bank origin. However, this variable becomes statistically insignificant in the regression for Colombia. The coefficient on the dummy indicating foreign ownership continues to be negative and significant in Argentina and Chile. However, this variable is now positive and significant in the case of Colombia.

13 Since the growth rates are calculated based upon annual growth rates (i.e., growth over a full year), data are omitted for a full year following a merger or acquisition to prevent such transactions from affecting results. For example, a merger that doubles the size of a bank will result in abnormally large annual growth rates for a full year after a merger even if the merged bank makes no new loans over this period. Consequently, many observations involving mergers and new entries are dropped from the analysis and several dummies are dropped from the growth regressions entirely. For example, if a merger occurs one year before the end of the period, all post-merger information is lost from the growth regressions, whereas it would be included in the share regressions.

14 The interaction term and the dummy are jointly insignificant for both Colombia and Peru (F statistics of F (2,174) = 0.20 and F (2,161) = 0.14).

**_15_** The only specifications in Table 5 that offer no such evidence are the ones for Argentina and Colombia that omit the interaction term between size and foreign ownership.

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