Small Business Economics

, Volume 34, Issue 3, pp 293–308 | Cite as

Changes in the banking system and small business lending

  • David Vera
  • Kazuki Onji


Since small businesses typically rely on small banks as their primary source of financing, there are concerns that the wave of bank consolidation of the 1990s may have reduced the availability of loans to small businesses in the US. Using a panel of state-level banking information over 1993–2002, this paper shows that the Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994 reduced the number of small banks, but not the amount of small business lending. We also show that small banks are participating less in small business lending. These results imply that the bank-lending channel of the monetary transmission mechanism became less important in the US in the late 1990s as a result of more firms borrowing from large banks that are less sensitive to monetary shocks.


Panel data Bank lending 

JEL Classifications

G18 G38 L26 


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Copyright information

© Springer Science+Business Media, LLC. 2008

Authors and Affiliations

  1. 1.Department of EconomicsKent State UniversityKentUSA
  2. 2.Crawford School of Economics and GovernmentThe Australian National UniversityCanberraAustralia

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