Bank Size, Lending Technologies, And small Business Finance

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Executive Summary

Under the current paradigm in small business lending research, large banks tend to specialize in lending to relatively large, informationally transparent firms using "Hard" information, while small banks have advantages in lending to smaller, less transparent firms using "Soft" information. The authors go beyond this paradigm to analyze the comparative advantages of large and small banks in specific lending technologies. The analysis begins with the identification of fixed-asset lending technologies used to make small business loans.

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