The relationship between UK SMEs and their bankers has been the subject of considerable debate over the years. The literature suggests that one area of concern is UK banks adopting a security-based approach to lending to SMEs. The literature also suggests that European banks ‘do it differently’. Given the considerable number of overseas financial institutions operating in the UK, the research reported here aimed to find out whether European banks in the UK were lending to UK SMEs and, if they were, what approach they adopted to lending practice. The data for the research study was collected via interviews with the bankers concerned using the methodology previously adopted by Berry et al. (1993b). The study found that only 10 European banks were active in lending to UK SMEs and that these European banks adopted a mixture of approaches to SME lending. The implications of this are that the European banks are unlikely to provide the sort of influence that was apparent from the US banks in the 1970s and 1980s in the large corporate lending sector, either by way of any real competition to the UK banks in the SME sector of lending or through indirect influence via different approaches to lending practice.
|Number of pages||16|
|Journal||International Small Business Journal|
|Publication status||Published - 2004|
- European banks