Does bank complexity during the COVID-19 crisis alter the financing mechanism for small and medium-sized enterprises?

Chen B. Zhang C. Saydaliev H.B.
September 2022 Elsevier B.V.

Economic Analysis and Policy
2022 #75 705 - 715 pp.

Commercial banks are the largest creditor to small and medium-sized enterprises (SMEs) in the United States. This is regardless of the size of the business and includes new and fledgling ones. Despite this, it is almost impossible for banks to understand whether an SME has a good credit status due to increased information asymmetry. This could, therefore, prevent banks from lending money to an SME. Having seen their financing contract after the 2007–2009 financial crisis, American SMEs have lost even more market share for business loans. The Small Business Credit Survey by the Federal Reserve showed that “small employer companies” (firms with at least one non-owner employee, but fewer than 500) in the US had the most frequent financial challenge. Just 42% of these firms had their financing requirements fulfilled. Thus, the study findings confirmed the nexus between the variables. Financing shortages are detrimental to SMEs and have been shown to keep them from reaching their full potential to expand and provide economic benefits. This study also suggests different policy implications for the stakeholders.

Bank complexity , Commercial banks , Financing for SMEs , Financing system , Small and medium-sized enterprises

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School of Economics & Management, Northwest University, Xian, 710127, China
Beijing Geely University, Beijing, 100192, China
School of Finance, Jiangxi University of Finance and Economics, Jiangxi, Nanchang, 330013, China
Business School, Suleyman Demirel University, Kaskelen, Almaty, 040900, Kazakhstan
Mathematical Methods in Economics, Tashkent State University of Economics, Tashkent, 100003, Uzbekistan

School of Economics & Management
Beijing Geely University
School of Finance
Business School
Mathematical Methods in Economics

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