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ISSN : 2233-4165(Print)
ISSN : 2233-5382(Online)
Journal of Industrial Distribution & Business Vol.9 No.9 pp.15-23
DOI : http://dx.doi.org/10.13106/ijidb.2018.vol9.no9.15

Non-Bank Lending to Firms: Evidence from Korean Firm-Level Data

Mihye Lee*
* Assistant Professor, Division of Economics and Information Statistics, Kangwon National University, Korea. Tel: +82-33-250-6123, E-mail: mihyelee@kangwon.ac.kr
August 12, 2018 August 22, 2018 September 15, 2018

Abstract

Purpose - The purpose of this paper is to examine the determinants of non-bank depository institutions (non-bank financial corporations) lending to firms. The paper aims to contribute to the existing literature by providing empirical evidence from firm-level data and unveiling factors related to access to non-bank financial corporations by firms.
Research design, data, and methodology – We used the data on borrowing by firms from CRETOP from years 2008 to 2011. Using the manufacturing industry, we examined what firm-level characteristics explained the increase in borrowing from non-bank financial corporations rather than the banks.
Results – Analyzing the firm-level data from 2008 to 2011, we found that firms were more likely to borrow from non-bank financial institutions as the size of the firm increases, implying that large firms have more access to non-bank financing than small and medium-sized firms. In addition, it also showed that small and medium-sized firms moved to non-bank financial corporations for loans.
Conclusion - Non-bank depository institutions are not a substitute for bank lending to firms. More specifically, they replace bank lending to firms mostly for large firms rather than small and medium-sized firms. Also, collateral and other firm-level characteristics do not matter in accounting for non-bank lending to firms.

JEL Classifications: G32, G38, G21

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