Lots to think about in this paper. One finding which did not surprise me was that it's incorrect to think that foreign banks in these markets do mostly transactional (data) based lending, while local banks do mostly relationship (credit officer, high-touch) based lending. In fact, one can find numerous counterexamples in both types. My experience with EBRD technical assistance to both types of banks taught me that, even if the European parent did mostly transactional lending, these people often were not transferred into the emergin markets, and the banks relied more on relationship based approaches taught, in many cases, by EBRD-sponsored external consultants. By contrast, some of the more ambitious local banks wanted to get a leg up on the competition by pushing into more technology based transactional approaches, particularly if they had a large customer base and geographic footprint. On the other hand, what's really new and interesting to me was evidence that the institutions with a stronger relationship base were kinder to their SME clients during the downturn...I had heard numerous people theorizing that this would be the case, pre-crisis --- but this is the first true empirical evidence I've seen for emerging markets on this occurrence. Just goes to show that we need both the computer and the shoe-leather approach to SME finance going forward!matt
