Proceedings of European Business Research Conference

Proceedings of European Business Research Conference
Sheraton Roma, Rome, Italy, 5 - 6 September 2013, ISBN: 978-1-922069-29-0
The Role of Local Banks for SMEs Financing: New Evidence
from Europe
Valerio Pesic and Fabrizio Santoboni
The recent credit crisis has reminded us how crucial is the role performed by
banks in supplying lending to the economy, especially when a serious
financial distress occurs (Borio, Zhu, 2008; Blundell-Wignall, Atkinson, Lee,
2008; Kirkpatrick, 2009; Acharya, Richardson, 2009; Gambacorta, MarquesIbanez, 2011). From this perspective, particularly interesting has been
considered the experience of those banking systems, where the presence of
many local banks helped to mitigate the effects of financial turbulences, so
that a severe credit crunch has not materialised (ECB, 2009; Draghi, 2010).
Through our work we aim to add to the economic literature which focuses
attention on the relationship existing between local banks and small and
medium enterprises in Europe, in order to research for their potential impact
on economic development and growth of different countries (Berger, Udell,
2006; Beck, Demirgüç-Kunt, 2006; Beck et al., 2009; De la Torre et al,
2010). More specifically, after considering the evolution observed over the
last few years by different countries, together with the level of competition
achieved by their banking systems (Petersen, Rajan, 2002; Degryse,
Laeven, Ongena, 2009), we look for the presence of any banks able to meet
the criteria for a local small bank, so to understand its role in supporting the
local economy and the development of SMEs (Berger, Udell, 2006). In order
to achieve this result, we created a unique and original dataset, covering the
period from 1999 to 2011, where the differences between the various
European banking systems are considered, together with the main
performance achieved by small and medium enterprises: the results we
obtained, among other issues, confirm our hypothesis about the positive
effect that local banks can play in order to generate a major level of credit
available for enterprises (Allen, Gale, 2007; Borio, Zhu, 2008; Acharya,
Richardson, 2009).
Track: Banking
Keywords: Local Banks, SMEs, Financial Crisis, Europe
JEL code : G30, G32
Corresponding Author, Department of Management, University “La Sapienza”, Rome (Italy), Via del
Castro Laurenziano, 9 – 00161 Roma – Italy, Tel. +39 06 49766446 Fax. +39 06 4450079,
Email: [email protected]
Fabrizio Santoboni, PhD, Researcher of Banking and Finance, La Sapienza University, Rome, Italy.
E-mail: [email protected]