Do foreign banks lend less to small and medium enterprises than domestic banks in Developing countries? Analysis of data from four countries in Latin America suggests that although small foreign banks lend less than small domestic banks, the difference for large banks is considerably less

Large and foreign-owned institutions may have difficulty extending relationship loans to informationally opaque small firms. Bank distress does not appear to affect small business lending, although even small firms may react to bank distress by borrowing from multiple banks

Policymakers in Malaysia should weigh the distributional consequences of policy actions. They should also consider measures to alleviate the disproportionate impact that market imperfections have on small and medium-size industries