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Small Business Finance–What Works, What Doesn’t?

Jointly sponsored by DECRG and FPD
Organized by Thorsten Beck and Asli Demirguc-Kunt

Small enterprises face traditionally higher obstacles to accessing external finance than other groups such as large enterprises and even consumers.  While previous research has shown the importance of financial and institutional development for leveling the playing field between firms of different sizes in terms of access to finance and the relevance of specific elements of the contractual and information framework, such as credit registries, more analysis is needed in terms of specific government interventions and specific financing products that can help small enterprises.

This conference aims to bring together academics, practitioners and policy makers to discuss (i) lending techniques and products for small enterprises, (ii) market structure and small enterprise financing, (iii) government role’s in fostering small firms’ access to finance and (iv) alternatives to bank finance.


Monday, May 5, 2008

8:30 - 9:00

  Coffee and Registration

9:00 - 9:10

 Opening remarks: Alan Gelb (World Bank)

 9:10 - 10:30

   Session 1. Small Business Finance: Looking Beyond Credit
  Chair: Gerardo Corrochano (World Bank)
    Banking SMEs around the World: Lending Practices, Business Models, Drivers and Obstacles
    by Thorsten Beck, Asli Demirguc-Kunt and Maria Soledad Martinez Peria (World Bank)  Presentation
Discussant: Ricardo Bebczuk (Universidad Nacional de la Plata and Central Bank of Argentina)  Discussion
    Bank Involvement with SMEs: Beyond Relationship Lending
    by Augusto de la Torre, Maria Soledad Martinez Peria and Sergio Schmukler (World Bank)  Presentation
    Discussant: Ary Naim (IFC) 

10:30 - 11:00

  Coffee break

11:00 -12:20

  Session 2. Lending Technologies, Bank Size and Firm Entry
     Chair: Simon C. Bell (World Bank)
  "Bank Size, Lending Technologies, and Small Business Finance
    by Allen Berger (University of South Carolina and Wharton Financial Institutions Center) and Lamont Black (Federal Reserve Board) Presentation
  Discussant: Robert Hauswald (American University) Discussion
    Who Needs Credit and Who Gets Credit?”
    by Rebel Cole (DePaul University)  Presentation
  Discussant: Stijn Claessens (IMF)   Discussion

12:20 - 2:00

  Lunch break

2:00 - 4:00


Session 3. Lending Techniques and Market Structure

  Chair: Jean Michel Noel Marchat (World Bank)

The Impact of Organizational Structure and Lending Technology on Banking Competition"

    by Hans Degryse (Katholieke Universiteit Leuven), Luc Laeven (IMF) and Steven Ongena (Tilburg University)  Presentation
  Discussant: Gianni de Nicolo (IMF) Discussion
    Competition for Small Firm Banking Business: Lender Action vs. Market Structure"
    by Jonathan Scott and William Dunkelberg, (Temple University)  Presentation
Discusssant: Luc Laeven (IMF)   Discussion
  “Bank Structure and the Terms of Lending to Small Businesses” 
  by Rodrigo Canales (MIT Sloan) and Ramana Nanda, (Harvard Business School)
  Discussant: Costas Stephanou (World Bank)  Discussion

4:00 - 4:30


4:30 - 6:00

  Panel Discussion: Small Business Finance –
What do we know, what do we not know, what do we need to know?
    Chair: Asli Demirguc-Kunt (World Bank)

Participants: Laurence Carter (IFC), Robert Kahn (World Bank), Mitchell Petersen (Northwestern University), Gregory Udell (Indiana University)

Tuesday, May 6, 2008
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9:00 - 11:00

  Session 4.  Innovation to Improve Small Business Finance
    Chair: Tony Lythgoe (IFC)
    Getting Credit to High Return Microenterprises: The Results of an Information Intervention
    by Suresh de Mel (University of Peradeniya), David McKenzie (World Bank) and Chris Woodruff (University of California, San Diego)  Presentation
    Discussant: Shawn Cole (Harvard Business School)  Discussion
    The Emergence of Credit Information Sharing in Credit Markets

by Martin Brown (Swiss National Bank) and Christian Zehnder
(Harvard Business School)  Presentation

  Discussant: Inessa Love (World Bank)  Discussion

The Surprising Use of Credit Scoring in Small Business Lending by ‘Community Banks’ and the Attendant Effects on Credit Availability and Risk

  by Allen Berger (University of South Carolina and Wharton Financial Institutions Center), Adrian Cowan (University of Alabama), and Scott Frame (Federal Reserve Bank of Atlanta)  Presentation
  Discussant: Margaret Miller (World Bank)  Discussion

11:00 - 11:30

  Coffee break

11:30 - 1:00

  Session 5. Government Interventions
    Chair: Thorsten Beck (World Bank)
    Entrepreneurship and Credit Constraints: Evidence from a French Loan Guarantee Program
    by Claire Lelarge (National Institute of Statistics and Economic Studies, France), David Sraer (CREST and University of California, Berkeley) and David Thesmar (National Institute of Statistics and Economic Studies, France)  Presentation
  Discussant: Meghana Ayyagari (George Washington University)  Discussion
    “Bankruptcy and Business Cycle: Are SMEs Less Sensitive to Systematic Risk?”

by Tor Jacobson, Rikard Nilsson and Kasper Roszbach (Sveriges Riksbank),

  Discussant: Andrew Powell (Inter-American Development Bank) Discussion

1:00 - 2:30

 Lunch break

2:30 - 4:00

 Session 6: Alternatives to Bank Finance
  Chair: Penelope Brook (IFC)
  Formal versus Informal Finance: Evidence from China
  by Meghana Ayyagari (George Washington University), Asli Demirguc-Kunt (World Bank ) and Vojislav Maksimovic (University of Maryland)  Presentation
  Discussant: Jordan Siegel (Harvard Business School)  Discussion
  Trade Credit Supply, Market Power and the Matching of Trade Credit Terms
  by Daniela Fabbri (University of Lausanne) and Leora Klapper (World Bank)
  Discussant: Rohan Williamson (Georgetown University)  Discussion

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