Changing the large bank loans role in the small business development

Abstract

The article is aimed at analyzing the world and domestic practice of small business lending by large banks and changing their role as major suppliers of financial resources. The article also examines the existing and new forming alternative forms of attracting resources, which, today, better meet the needs and opportunities of small business. An analysis of the statistics showed that lending to small businesses by the four largest banks in the network has fallen sharply compared to others since 2008 and remains relatively depressed to this day. The article examines the dynamic adjustment process after this shock for the loan offer. In countries where the largest banks had high market shares, aggregate credit flows for small businesses fell, interest rates rose, fewer businesses rose, unemployment rose, and wages fell. The flow of loans resumed somewhat after 2010, but other lenders intensified, slowly filling the void, but interest rates remained high. It should be concluded that the influence of these factors, as well as the development of blockchain technologies and the emergence of alternative (public) forms of financing and development of social enterprise are gradually leading to the loss of key positions of the banking sector in financing small business projects.

Keywords

• small business, financing and loans, banks and banking, system shocks, banking