Annotated Bibliography - Assignment Example

Berger, A. N., & Udell, G. F. (2002). Small business credit availability and relationship lending: The importance of bank organisational structure. The Economic Journal, 112(477), F32-F53.The article seeks to provide a deeper understanding of the inner workings and the unique types of relationships that define banking and its organizational structure. Essentially, the authors of the piece expend a great deal of effort in thoroughly defining and illustrating the mechanisms of major banking and lending institutions prior to seeking to draw inference on the research question; namely the credit availability and its impact upon the organizational structure of banks.

As a function of analyzing the issue the piece references the fact that relationship lending has previously been the staple by which credit-worthiness has been determined. Yet, in a world that is increasingly complex and financially segmented, the power of relationship banking and lending to continue to define the future is increasingly limited. Another wrinkle that the authors indicate is the fact that the loan officer becomes nothing more than a receptacle of “soft” information specific to certain individuals and based upon existing relationships and past choices that have been made.

In such a manner, the researchers point to the fact that this not only limits the degree and extent to which promotion and business development can take place, it constrains the organizational development of the banking institution. Nevertheless, the system, as described, helps to create a more dynamic entity that is able to react to market changes better than a faceless bank that is not attuned to the needs of the individual investor or borrower. Berger, A. N., Saunders, A., Scalise, J. M.

, & Udell, G. F. (1998). The effects of bank mergers and acquisitions on small business lending. Journal of financial Economics, 50(2), 187-229.This particular article, although somewhat old, focuses on the effects of bank mergers and acquisitions; specifically focusing on what the authors refer to as the static effect. Within this level of inquiry, the analysis seeks to divorce related issues from bank mergers and acquisitions by focusing on the antecedent institutions and refocusing the analysis on the similar and differential realities that are exhibited post-merger or acquisition.

Similarly, the analysis provides a heavy analytical and quantitative measurement of these determinants in the hopes of pin-pointing the key differentials that are exhibited by firms at varying stages of the process. In order to counter for some of the data that was represented, the article also goes on to discuss the ways in which offsets to these factors may be recognized; essentially indicating that synergy and other business concepts can be applied as a means of understanding the oftentimes difficult process of two distinct entities coming to be one.

The article concludes that static effects of consolidation ultimately reduce small business lending; however, they are mostly offset by the reactions of other banks within the system. Whereas this is not invariably true, the measurements that were provided illustrated a significant enough inference to draw such a conclusion.