Abstract
We investigate the impact of local banking market concentration on small and medium-sized enterprises’ access to finance in Ukraine, as an under-researched case of a country where crime and corruption rates are high. We combine firm-level observations from the EBRD’s BEEPS survey with unique, self-collected data on local banking markets. We take into account the specific context of a transition economy by introducing measures of institutional weakness. Our results show a non-monotonic relationship between banking market concentration and access to finance. Across all firms, some banking market power proves to increase access to finance, but too much concentration has an adverse effect. This is consistent with the theories that stress the importance of asymmetric information. However, for SMEs with higher perceptions of institutional weakness, we find that access to finance improves at both the lowest and highest levels of banking market concentration. We conjecture that such a dual impact might be typical for transition economies.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.