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Reforming Rules and RegulationsLaws, Institutions, and Implementation$
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Vivek Ghosal

Print publication date: 2010

Print ISBN-13: 9780262014687

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262014687.001.0001

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Drivers and Obstacles to Banking SMEs

Drivers and Obstacles to Banking SMEs

The Role of Competition and the Institutional Framework

(p.215) 9 Drivers and Obstacles to Banking SMEs
Reforming Rules and Regulations

Augusto de la Torre

María Soledad Martínez Pería

Sergio L. Schmukler

The MIT Press

This chapter analyzes the drivers and obstacles to lending to small and medium enterprises (SMEs). Of particular interest is the role of competitive and institutional environments in shaping SME lending, and more generally banks' interest in dealing with SMEs. The study compares banks in Argentina and Chile. Among the main findings are that, despite institutional differences, SMEs have become a strategic sector for most banks in both countries. Banks seem to be focusing on SMEs because the segment's profitability is expected to more than compensate for the higher implied costs and risks, especially given thinning margins in the corporate and retail sectors due to increased competition.

Keywords:   small and medium enterprises, financing, lending, Argentina, China, banking industry

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