MICROECONOMIC INCENTIVES AND FINANCIAL CONSEQUENCES OF BANK COMPETITION IN ENSURING SMALL AND MEDIUM-SIZED ENTERPRISES' ACCESS TO CREDIT
DOI:
https://doi.org/10.32782/2311-844X/2026-1-3Keywords:
bank, banking management, banking competition, lending to small and medium-sized enterprises, microeconomic incentives, access to credit, digitalization of banksAbstract
This study examines the microeconomic incentives for competition among banks in the area of lending to small and medium-sized enterprises and identifies its financial implications for the availability, cost, and terms of access to credit resources. It is argued that the development of small and medium-sized enterprises depends significantly on access to external financing, but this access is limited by information asymmetry, high costs of borrower assessment, risks, strict collateral requirements, and the heterogeneity of enterprises’ business models. It is demonstrated that competition among banks in the SME segment is not limited to lowering interest rates, but manifests itself through a combination of price, non-price, technological, and behavioral mechanisms that determine the parameters of credit products, assessment procedures, decision-making speed, the level of digital support, and financing flexibility. It has been established that increased competition can have both positive and contradictory consequences for small and medium-sized enterprises. The positive effect is manifested in the expansion of lending channels, an increase in the choice of financial products, the reduction of certain barriers, and the development of financial inclusion and digital solutions. At the same time, under conditions of high uncertainty, standardization of lending procedures, and banks’ focus on the most creditworthy clients, some small and medium-sized enterprises may remain excluded from quality credit provision. It has been established that the financial consequences of competition manifest themselves in changes in credit availability, shifts in the cost of borrowed capital, and modifications to credit terms. The best results are achieved through a combination of market incentives for banks, digital financial infrastructure, improved creditworthiness assessments, the use of fintech solutions, and government support. It is shown that the quality of competition is determined not only by the number of banks but also by their ability to use scoring models and tailored approaches to small and medium-sized enterprises. The role of government guarantees and support programs as catalysts for credit expansion in Ukraine is identified.
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