The Effect of Characteristic Change of Interest Rate Behavior on SME Loan Business of Banks

다국어 초록 (Multilingual Abstract)

This study analyzes empirically on the relationship between the change of SME loan business trends and characteristic change of market interest rate behavior such as its spreads, volatility, and level. Besides, this study aims at finding out the motivation to make the SME loan business invigorated or depressed in terms of risk management perspectives or profitability pursuit. There is contribution point in that this study discusses arguments between Minetti (2007) and Den, Sumner, Yamashiro (2007). Main results of this study are as follows. First, the significant factors to make SME loan business' trends changed are the spread of market interest rate based on the difference of credit rate, market interest rate volatility, and market interest rate level. These factors indicate credit risk, market risk, and default risk of borrowers. Second, Korean banks tend to make SME loan business trends changed in comparison to consumer loan business with motivation of risk management perspectives. This evidence is line with Minetti (2007). Third, the argument that banks tend to change SME loan business trends attributed to the pursuing the profitability as suggested by Den, Sumner, Yamashiro (2007) is not accepted in the Korean banks.

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