This paper examines how banking market concentration affects small business credit. Based on an idea that line-of-credit (L/C) limit and L/C balance provide useful proxies for credit supply to and credit demand of a firm, we examine the effect of bank concentration on L/C limits and L/C balances. Using Heckman selection models to correct for sample selection, bank concentration is found to lower limits of L/Cs, where there was no statistically significant difference in L/C balances. We also find that small firms in concentrated banking markets have lower overall institutional debt-to-asset ratios.
G21, G32, L25
Banking , Concentration , Credit
"Banking Market Concentration and Credit Availability to Small Businesses,"
Journal of Entrepreneurial Finance and Business Ventures:
3, pp. 47-69.
Available at: http://digitalcommons.pepperdine.edu/jef/vol12/iss3/4