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Local banks, their changing roles and financial space, and perceptions by local SMES
Author
Lum, Kit Kuan
Supervisor
Wong, Shuang Yann
Abstract
This study attempts to examine the changing roles of local banks, and their ability to withstand competition from larger global players in niche sectors, particularly the local SME market. The research findings imply that local banks are likely to retain their dominance in the SME market space in the short run to easy access facilitated by physical proximity, extensive distribution of bank branches as well as long-established relations. In the long run, however, their dominance may weaken as relations with major clients (that is SMEs) become increasingly formal. Regional and global foreign banks which can provide similar or better services may further erode local banks' competitiveness. The study also found that ethnic relations have become less significant in gaining support of local enterprises. The support of local banks varies with the type of industry, years of established relations, age and education of managers, and government's support. It is also found that local banks impose stringent rules in rendering support to SMEs, and tend to safeguard their interests by demanding collaterals, thereby excluding many small businesses with little resources. In addition, local banks are perceived to be poorer in service and expertise level, as well as in international connectivity. As a result, displeasure has intensified among the SME customers especially with the recent economic downturn and after local banks' recent mergers. However, it is found that the strong relations established between local enterprises and local banks' managers / officers may help in sustaining local enterprises' trust of their local banks and supplying the banks with invaluable information about the creditworthiness of these borrowers.
Date Issued
2004
Call Number
HG3300.67 Lum
Date Submitted
2004