A more complete conceptual framework for financing of small and medium enterprises

Allen Berger () and Gregory Udell ()

No 3795, Policy Research Working Paper Series from The World Bank

Abstract: The authors propose a more complete conceptual framework for analysis of credit availability for small and medium enterprises (SMEs). In this framework, lending technologies are the key conduit through which government policies and national financial structures affect credit availability. They emphasize a causal chain from policy to financial structures which affect the feasibility and profitability of different lending technologies. These technologies, in turn, have important effects on SME credit availability. Financial structures include the presence of different financial institution types and the conditions under which they operate. Lending technologies include several transactions technologies, plus relationship lending. The authors argue that the framework implicit in most of the literature is oversimplified, neglects key elements of the chain, and often yields misleading conclusions. A common oversimplification is the treatment of transactions technologies as a homogeneous group, unsuitable for serving informationally opaque SMEs, and a frequent misleading conclusion is that large institutions are disadvantaged in lending to opaque SMEs.

Keywords: Banks&Banking Reform; Financial Intermediation; Investment and Investment Climate; Economic Theory&Research; Financial Crisis Management&Restructuring (search for similar items in EconPapers)
Date: 2005-12-01
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-ent, nep-fmk and nep-knm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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