Changes in the Banking System and Small Business Lending

Posted: 7 Feb 2010

See all articles by David Vera

David Vera

University of California, San Diego (UCSD) - Department of Economics

Kazuki Onji

Australian National University - Crawford School of Economics and Government

Date Written: 2009

Abstract

Since small businesses typically rely on small banks as their primary source of financing, there are concerns that the wave of bank consolidation of the 1990s may have reduced the availability of loans to small businesses in the US. Using a panel of state-level banking information over 1993-2002, this paper shows that the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 reduced the number of small banks, but not the amount of small business lending. We also show that small banks are participating less in small business lending. These results imply that the bank-lending channel of the monetary transmission mechanism became less important in the US in the late 1990s as a result of more firms borrowing from large banks that are less sensitive to monetary shocks.

Keywords: Panel Data, Bank Lending

JEL Classification: G18, G38, L26

Suggested Citation

Vera, David and Onji, Kazuki, Changes in the Banking System and Small Business Lending (2009). Small Business Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1549278

David Vera

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

Kazuki Onji (Contact Author)

Australian National University - Crawford School of Economics and Government ( email )

Building #132
Australian National University
Canberra 0200
Australia

HOME PAGE: http://www.crawford.anu.edu.au/staff/konji.php

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
1,524
PlumX Metrics