Is Small Beautiful? Financial Structure, Size and Access to Finance

Sep 01, 2011 | T. Beck, A. Demirgüç-Kunt, D. Singer | The World Bank
Combining two unique data sets, this paper explores the relationship between the relative importance of different financial institutions and their average size and firms’ access to financial services. This paper focuses on two main findings. First, the dominance of banks in most developing and emerging markets is associated with lower use of financial services by firms of all sizes. Second, there is no evidence that smaller institutions are better in providing access to finance. To the contrary, larger specialized lenders and larger banks might actually ease small firms’ financing constraints, but only at low levels of gross domestic product per capita.
Theme: Financial Inclusion | Pages: 34