Consolidation drives change in small-business lending

According to an SBA news release, the study’s findings suggest that, in general, larger bank holding companies tend to do less small-business lending as a percentage of total loans.

The study also shows that bank holding company organization methods affect small-business lending differently. For example, when bank holding companies acquire other banks but do not merge them, small-business lending is affected very little. However, when bank portfolios are merged and integrated into larger banks, small-business lending declines.

“Financial innovation and deregulation are changing the services banks offer to their small-business customers,” said Thomas M. Sullivan, chief counsel for advocacy, in the release. “Many of the changes have been positive and have opened up capital markets to more firms. Others are changing the relationship between what were once local banks and their customers.”

The report, “The Effects of Mergers and Acquisitions on Small Business Lending by Large Banks,” was completed by KeyPoint Consulting LLC, with funding from the SBA’s Office of Advocacy. The study focused on noncredit-card lending at the 50 largest bank holding companies in the United States. The authors used annual data from 1997-2002, which includes both the 2001 recession and the beginning of recovery in 2002.

Created by Congresss in 1976, the SBA’s Office of Advocacy provides a voice for small business in the federal government.

[[In-content Ad]]