Bank competition and SMEs access to finance in India: evidence from World Bank Enterprise Survey

IF 2.3 Q2 BUSINESS, FINANCE

Asian Review of Accounting Pub Date : 2023-01-10 DOI:10.1108/ara-05-2022-0124

Bijoy Rakshit, Samaresh Bardhan

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引用次数: 3

Abstract

PurposeThe primary purpose of this study is to investigate the effects of bank competition on SMEs' access to finance in selected Indian states. Using 9,281 firm-level observations from World Bank Enterprises Survey (WBES), this study tests the market power hypothesis versus the information hypothesis to determine whether bank competition promotes access to finance for financially constrained firms.Design/methodology/approachThe authors measure state-level bank competition using two structural indicators: the Herfindahl Hirschman Index (HHI) and three bank concentration ratios (CR3). The authors apply simple probit regression, probit model with sample selection (PSS) and two-stage least squares (2SLS) to examine the effects of bank competition on firms' financing constraints.FindingsThe results obtained through PSS and 2SLS indicate that bank competition alleviates firm's financing constraints and positively impacts its need for a bank loan and the decision to apply for bank credit. However, the prevalence of bank competition in promoting access to finance is more pronounced for small and medium-sized firms than for large firms. Higher bank competition also alleviates the credit constraints faced by female entrepreneurs.Practical implicationsReserve Bank of India (RBI) and other government stakeholders should ensure bank competition without hampering the agenda of bank consolidation to facilitate access to credit for SMEs. Regulators should also identify and monitor the financial institutions that make an insignificant contribution to promoting competitiveness in the financial system.Originality/valuePrevious studies primarily investigate the effect of bank competition on a firm's access to finance from advanced and cross-country perspectives. This study contributes to the literature on bank competition by examining its role in promoting access to finance from an emerging economy standpoint. Measurement of bank competition indicators at the state level is an additional contribution.

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印度银行竞争与中小企业融资渠道：来自世界银行企业调查的证据

目的本研究的主要目的是调查印度选定州的银行竞争对中小企业融资渠道的影响。本研究利用世界银行企业调查（WBES）的9281个企业层面的观察结果，检验了市场力量假说与信息假说，以确定银行竞争是否促进了财务受限企业获得融资。设计/方法/方法作者使用两个结构指标来衡量州级银行的竞争：赫芬达尔-赫希曼指数（HHI）和三个银行集中度（CR3）。本文运用简单概率回归、样本选择概率模型（PSS）和两阶段最小二乘法（2SLS）研究了银行竞争对企业融资约束的影响。通过PSS和2SLS获得的结果表明，银行竞争缓解了企业的融资约束，并对其对银行贷款的需求和申请银行信贷的决定产生了积极影响。然而，与大公司相比，银行在促进融资方面的竞争在中小型公司中更为普遍。银行竞争加剧也缓解了女性企业家面临的信贷限制。实际意义印度储备银行（RBI）和其他政府利益相关者应确保银行竞争，而不妨碍银行整合议程，以促进中小企业获得信贷。监管机构还应查明和监测对提高金融体系竞争力贡献不大的金融机构。原创性/价值以往的研究主要从先进和跨国的角度调查银行竞争对企业融资渠道的影响。本研究从新兴经济体的角度考察了银行竞争在促进融资方面的作用，为有关银行竞争的文献做出了贡献。衡量州一级的银行竞争指标是一个额外的贡献。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Asian Review of Accounting BUSINESS, FINANCE-

CiteScore

3.20

自引率

25.00%

发文量

期刊介绍： Covering various fields of accounting, Asian Review of Accounting publishes research papers, commentary notes, review papers and practitioner oriented articles that address significant international issues as well as those that focus on Asia Pacific in particular.Coverage includes but is not limited to: -Financial accounting -Managerial accounting -Auditing -Taxation -Accounting information systems -Social and environmental accounting -Accounting education Perspectives or viewpoints arising from regional, national or international focus, a private or public sector information need, or a market-perspective or social and environmental perspective are greatly welcomed. Manuscripts that present viewpoints should address issues of wide interest among accounting scholars internationally and those in Asia Pacific in particular.