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The Internet, Bank Structure and Small Business Lending

The Internet, Bank Structure and Small Business Lending

The advent of the Internet has opened many opportunities for bankers to access new customers, increase convenience and expand product ranges in many markets, including that of small businesses. Yet anecdotal evidence reveals that smaller banks are reluctant to employ Internet technology in the small business market for fear of damaging the customer relationship developed through personal contact. These smaller, more simply structured banks tend to specialize in small business lending, possessing a comparative advantage in that market (Craig and Hardee, 2001). This is particularly so in relationship driven credits where personal knowledge of the borrower is paramount over financial ratios produced through credit scoring models (Berger and Udell, 1995, 1994). However, with technological... Show More
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