After the financial crisis of 1997～1998, the co-movement between Korean banks' lending to small and medium enterprise (hereafter SME) and business cycle has been more intensified than before. This means that SME lending have responded more volatilely over business cycle before the crisis. These facts would seem to indicate that there has been a great deal of fundamental change in the SME lending market in Korea.
The objective of this paper is to examine the reasons that have magnified the co-movement between business cycle and SME lending, and to provide strategic tools to alleviate the co-movement. For this purpose, the core ability to execute SME lending properly must be ascertained in the context of badly restricted information on the credit-worthiness of SMEs. That is to say, we have to find the means available to reduce information asymmetries in SME financing.
In this paper, I examine the relationship between business cycle and Korean banks' SME lending through the empirical analysis with semiannual panel data classified by banks during 1999～2004 period. In addion, I investigate the causes to amplified the cyclicality of SME lending.
Estimation results provide the evidence that the cyclicality of Korean banks' SME lending is substantial. I also find the evidence that the cyclicality of Korean banks' SME lending increases in its magnitude when the real GDP interacted with the size variable or soundness variable such as banks' asset size and BIS ratio was incorporated. This implies that the trend of consolidation and soundness-oriented fund's operation in bank sector is dominant factor to amplified the cyclicality of SME financing after the financial crisis.
경기변동과 중소기업 자금조달간의 관계에 대한 연구(The relationship between business cycle and SME financing)
|Series Title; No||금융조사보고서 / 2006-01|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||한국금융연구원; KDI 국제정책대학원|