{"title":"Foreign bank entry and performance of domestic SMEs: evidence from Korea","authors":"Junyong Lee, Frederick Dongchuhl Oh","doi":"10.1007/s10436-025-00460-1","DOIUrl":null,"url":null,"abstract":"<div><p>We examine whether foreign bank entry enhances the performance of small and medium-sized enterprises (SMEs) in Korea. Using panel data on Korean firms from 1991 to 2019, we first confirm that foreign banks positively influence the amount of bank loans received by Korean SMEs, suggesting that their entry contributes to improving SMEs’ credit access. Additionally, the positive impact of foreign bank entry is more pronounced for SMEs characterized by high information asymmetry and strong growth potential. Further, improved credit access through foreign banks is positively associated with the long-term performance of SMEs. Overall, our study highlights the importance of foreign banks for improving both credit access and the performance of domestic SMEs in a transition economy.</p></div>","PeriodicalId":45289,"journal":{"name":"Annals of Finance","volume":"21 2","pages":"131 - 162"},"PeriodicalIF":0.7000,"publicationDate":"2025-03-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Annals of Finance","FirstCategoryId":"1085","ListUrlMain":"https://link.springer.com/article/10.1007/s10436-025-00460-1","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q4","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
We examine whether foreign bank entry enhances the performance of small and medium-sized enterprises (SMEs) in Korea. Using panel data on Korean firms from 1991 to 2019, we first confirm that foreign banks positively influence the amount of bank loans received by Korean SMEs, suggesting that their entry contributes to improving SMEs’ credit access. Additionally, the positive impact of foreign bank entry is more pronounced for SMEs characterized by high information asymmetry and strong growth potential. Further, improved credit access through foreign banks is positively associated with the long-term performance of SMEs. Overall, our study highlights the importance of foreign banks for improving both credit access and the performance of domestic SMEs in a transition economy.
期刊介绍：
Annals of Finance provides an outlet for original research in all areas of finance and its applications to other disciplines having a clear and substantive link to the general theme of finance. In particular, innovative research papers of moderate length of the highest quality in all scientific areas that are motivated by the analysis of financial problems will be considered. Annals of Finance''s scope encompasses - but is not limited to - the following areas: accounting and finance, asset pricing, banking and finance, capital markets and finance, computational finance, corporate finance, derivatives, dynamical and chaotic systems in finance, economics and finance, empirical finance, experimental finance, finance and the theory of the firm, financial econometrics, financial institutions, mathematical finance, money and finance, portfolio analysis, regulation, stochastic analysis and finance, stock market analysis, systemic risk and financial stability. Annals of Finance also publishes special issues on any topic in finance and its applications of current interest. A small section, entitled finance notes, will be devoted solely to publishing short articles – up to ten pages in length, of substantial interest in finance. Officially cited as: Ann Finance
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