Do Local Banking Market Structures Matter for SME Financing and Performance? New Evidence from an Emerging Economy

Influence of internet and social media presence on small, local banks’ market power

“…SALARY and UNEMPL control for the level of wages and for the situation on the labour market, respectively, in the counties in which a bank operates, whereas OUTLET.DENS and BRANCHES describe local banking market traits. Therefore, our approach is similar to those applied in the seminal works on online banking by DeYoung (2005) and DeYoung et al (2007) but also in the papers regarding local banking markets and small business finance (Berger, Bouwman, & Kim, 2017;Hasan et al, 2017) and works on entry into online banking (Courchane et al, 2002). Moreover, previous studies document that local economic situation plays an important role in shaping cooperative bank performance (Skała, 2015) and that traits of local markets co-determine the customers' propensity to accept online banking in Poland (Polasik & Wisniewski, 2009).…”

“…H2: The negative relationship between I&SMP and SLBs' market power is stronger when SLBs compete locally with numerous credit institutions SLBs usually excel at small business lending (Berger & Udell, 1995;Canales & Nanda, 2012;Hasan et al, 2017;Petersen & Rajan, 1994) because their flat organizational structure facilitates both production and transmission of soft information (Boot, 2000;Stein, 2002). However, as Berger, Goulding, and Rice (2014) note, the changes in lending technologies (credit scoring, lending against fixed assets collateral) made it much easier for large banks to serve local, opaque firms.…”

“…In contrast, SLBs in Poland differ greatly according to their history of providing online services and current I&SMP. Second, SLBs play an extremely important economic role in providing loans for small-and medium-sized enterprises in emerging economies (Berger, Klapper, Martinez Peria, & Zaidi, 2008;Berger, Klapper, & Udell, 2001;Canales & Nanda, 2012;Hasan, Jackowicz, Kowalewski, & Kozłowski, 2017). Therefore, the competitive threats for SLBs and the factors determining their survival and market success constitute key questions from a policy-making point of view.…”

The impact of family ownership on capital structure of firms: Exploring the role of zero-leverage, size, location and the global financial crisis

“…Arena and Dewally (2012) argue that firms in rural areas have a cost disadvantage in credit markets, facing higher debt yield spreads, but are more likely to rely on relationship banking, repeatedly borrowing from the same banks. In fact, relationship banking (Han et al, 2017;Hasan et al, 2017) seems to be particularly important in less-urbanized areas, where interactions between loan officers and firm managers tend to be more frequent and fruitful, leading to the collection of better soft information. The main benefit of building close ties between firms and creditors is that the availability of financing increases (Petersen and Rajan, 1994).…”

The influence of capital expenditures on working capital management in the corporate sector of an emerging economy: the role of financing constraints

“…region in terms of market capitalisation and the number of listed companies. Third, the Polish financial market has a few distinguishing features that may be particularly important from the standpoint of the financing constraints theory: 1) the dominant role of foreign-owned commercial banks in fuelling financial intermediation (Hasan, Jackowicz, Kowalewski, & Kozlowski, 2017); 2) the relatively weaker role of the public debt market in enterprise financing; 3) the progressing internationalisation of the equity market with a dynamic growth of the share of foreign residents in the stock exchange turnover; and 4) the swift transformation and deregulation of the financial system over the last two decades.…”