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Using data from a survey of 91 banks in 45 countries, the authors characterize bank financing to small and medium enterprises (SMEs) around the world. They find that banks perceive the SME segment to be highly profitable, but perceive macroeconomic instability in developing countries and competition in developed countries as the main obstacles. To serve SMEs banks have set up dedicated departments and decentralized the sale of products to the branches. However, loan approval, risk management, and loan recovery functions remain centralized. Compared with large firms, banks are less exposed to small enterprises, charge them higher interest rates and fees, and experience more non-performing loans from lending to them. Although there are some differences in SMEs financing across government, private, and foreign-owned banks - with the latter being more likely to engage in arms-length lending - the most significant differences are found between banks in developed and developing countries. Banks in developing countries tend to be less exposed to SMEs, provide a lower share of investment loans, and charge higher fees and interest rates. Overall, the evidence suggests that the lending environment is more important than firm size or bank ownership type in shaping bank financing to SMEs.

Access to Finance --- Banks --- Banks and Banking Reform --- Debt Markets --- Employment --- Factoring --- Finance and Financial Sector Development --- Financial institutions --- Financial Intermediation --- Interest rates --- Nonperforming loans --- Profitability --- Prudential regulations --- Risk management --- Small banks

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This paper uses the standard one-sector neoclassical growth model to investigate why China's consumption has been low and investment high. It finds that the low cost of capital has been quantitatively an important factor. Theory predicts that the price of capital may have been significantly distorted in the 1990s and 2000s. The distortion could have been caused by nonperforming loans, borrowing constraints, and uncertainty over changes in government guidance in bank lending. If China is to rebalance growth towards relying more on consumption and less on exports and investment, banking sector reforms and financial market development could, therefore, turn out to be key.

Business cycles --- Economic development --- Capital market --- Consumption (Economics) --- Investments --- Finance --- Econometric models. --- China --- Economic policy. --- Economic cycles --- Economic fluctuations --- Cycles --- Banks and Banking --- Macroeconomics --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Macroeconomics: Consumption --- Saving --- Wealth --- General Aggregative Models: General --- Banking --- Consumption --- Nonperforming loans --- Loans --- National accounts --- Economics --- Banks and banking --- National income --- China, People's Republic of

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This study investigates the relationship between production efficiency in financial intermediation and financial system size. The study predicts and tests for the existence of "systemic scale economies" (SSEs), whereby value-maximizing intermediaries operating in large systems are expected to have lower production costs and lower costs of risk absorption and reputation signaling than intermediaries operating in small systems. The study investigates different channels through which the SSEs work their effects through the intermediaries and estimates such effects using a large banking data panel. The study shows strongly supporting evidence in favor of SSEs. It also finds that the institutional environment, the risk environment, and market concentration affect significantly the production efficiency of financial intermediaries.

Accounting --- Banks and Banking --- Macroeconomics --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Measurement and Data on National Income and Product Accounts and Wealth --- Environmental Accounts --- Public Administration --- Public Sector Accounting and Audits --- Banking --- Finance --- Public finance accounting --- Commercial banks --- Nonperforming loans --- GDP measurement --- Accounting standards --- Banks and banking --- Loans --- National income --- Finance, Public --- United States --- Gdp measurement

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This study analyzes foreign investment in Colombia’s financial system, chronicling major changes in legislation, describing how investment flows evolved over time, and comparing performance of foreign–owned versus domestic banks. Panel data estimations reveal that financial liberalization in general had a beneficial impact on bank behavior in Colombia. Although the positive contribution of foreign entry may be overstated in recent studies by not controlling for other liberalization factors, foreign (and domestic) entry beginning in 1990 did improve bank behavior by enhancing operative efficiency and competition. However, this came at the expense of a deterioration in the loan quality of domestic banks.

Banks and Banking --- Exports and Imports --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- International Investment --- Long-term Capital Movements --- Banking --- Finance --- Foreign banks --- Commercial banks --- Foreign direct investment --- Loans --- Financial institutions --- Balance of payments --- Nonperforming loans --- Banks and banking --- Banks and banking, Foreign --- Investments, Foreign --- Colombia

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This paper tests empirically the proposition that bank fragility is determined by bank-specific factors, macroeconomic conditions and potential contagion effects. The methodology allows for the variables that determine bank failure to differ from those that influence banks’ time to failure (or survival rate). Based on the indicators of fragility of individual banks, we construct an index of fragility for the banking system. The framework is applied to the Mexican financial crisis beginning in 1994. In the case of Mexico, bank-specific variables as well as contagion effects explain the likelihood of bank failure, while macroeconomic variables largely determine the timing of failure.

Banking --- Banks and Banking --- Banks and banking --- Banks --- Commercial banks --- Depository Institutions --- Distressed institutions --- Duration Analysis --- Economic & financial crises & disasters --- Finance --- Financial Crises --- Financial crises --- Financial Institutions and Services: General --- Financial institutions --- Financial Markets and the Macroeconomy --- Financial Risk Management --- Financial services industry --- Industries: Financial Services --- Loans --- Micro Finance Institutions --- Mortgages --- Nonperforming loans --- Mexico