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Banking Competition, Good or Bad? The Case of Promoting Micro and Small Enterprise Finance in Kazakhstan

Discussion Papers 479, 36 S.

Dorothea Schäfer, Boriss Siliverstovs, Eva Terberger

2005. Apr.

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Published in: Applied Economics 42 (2008), Iss. 6, 701-716


Competition is claimed to be beneficial in development projects promoting micro and small enterprise finance although there are still some doubts whether these loans can be developed into a profitable business. Actually nothing is known about how many MSE banking units optimally should be created and supported in a certain region. Our research aims at shedding new light on this important issue in development finance. We employ a unique dataset from the Small Business Department of the European Bank for Reconstruction and Development for Kazakhstan, and investigate which strategy contributes more to the overall program's success: a strategy of building up several competing banking units targeted at MSE lending or a strategy of establishing regional monopolies.

JEL-Classification: O16;O18;G21;G28
Keywords: Development finance; Micro loans; Competition; Financial institution building
Frei zugängliche Version: (econstor)