de la Torre, AugustoMartinez Peria, Maria SoledadSchmukler, Sergio L.2012-03-302012-03-302010Journal of Banking and Finance03784266https://hdl.handle.net/10986/5589The "conventional wisdom" in academic and policy circles argues that, while large and foreign banks are generally not interested in serving SMEs, small and niche banks have an advantage because they can overcome SME opaqueness through relationship lending. This paper shows that there is a gap between this view and what banks actually do. Banks perceive SMEs as a core and strategic business and seem well-positioned to expand their links with SMEs. The intensification of bank involvement with SMEs in various emerging markets is neither led by small or niche banks nor highly dependent on relationship lending. Moreover, it has not been derailed by the 2007-2009 crisis. Rather, all types of banks are catering to SMEs and large, multiple-service banks have a comparative advantage in offering a wide range of products and services on a large scale, through the use of new technologies, business models, and risk management systems.ENCC BY-NC-ND 3.0 IGOBanksOther Depository InstitutionsMicro Finance InstitutionsMortgages G210Financial Institutions and Services: Government Policy and Regulation G280Firm Performance: Size, Diversification, and Scope L250Microeconomic Analyses of Economic Development O120Economic Development: Financial MarketsSaving and Capital InvestmentCorporate Finance and Governance O160Socialist Enterprises and Their Transitions P310Socialist Institutions and Their Transitions: Financial Economics P340Journal ArticleWorld Bank