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Bank market structure, competition, and SME financing relationships in European regions

Research output: Contribution to journalJournal article

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<mark>Journal publication date</mark>1/12/2009
<mark>Journal</mark>Journal of Financial Services Research
Issue number2-3
Volume36
Number of pages18
Pages (from-to)137-155
Publication statusPublished
Early online date16/05/09
Original languageEnglish

Abstract

How do concentration and competition in the European banking sector affect lending relationships between small and medium sized enterprises (SMEs) and their banks? Recent empirical evidence suggests that concentration and competition capture different characteristics of banking systems. Using a unique dataset on SMEs for selected European regions, we empirically investigate the impact of increasing concentration and competition on the number of lending relationships maintained by SMEs. We find that competition has a positive effect on the number of lending relationships, weak evidence that concentration reduces the number of banking relationships and weak persistent evidence that they tend to offset each other.

Bibliographic note

Date of Acceptance: 22/04/2009