Foreign Banks vs. U.S. Banks: Impact on small business loans

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Associated with the potential growth of small businesses, Stanley, Roger and Mc Manis (1993) examined the effects of foreign ownership of U.S. banks on the availability of loanable funds for small businesses. The study indicates a bias towards the portfolios by foreign-owned full service banks when compared to domestically-owned counterparts. The study also indicates that although there was decrease among business lending among all banks, the percentage decrease was less among the foreign-owned banks when compared to the domestically-owned banks (Stanley, Roger and McManis, 1993, abstract). The purpose of the study was whether banks acquired by foreign interests were likely to restructure the loan portfolio used by the organization in a manner that could become detrimental to small business. The study also evaluates the extent to which the behaviors of foreign-owned banks parallel that of equally sized domestically owned banks in a variety of managerial discretionary areas affecting lending policy (Stanley, Roger and McManis, 1993, par.


Stanley, Roger and McCanis (1993) believed that restructuring of loan portfolios used by foreign-owned banks and domestic banks would be detrimental to small businesses, since the restructuring would cause a decrease in the amount of loans granted to small businesses. The research was conducted over a period of five years (1984 through 1989).

For the research, the researchers only included full service commercial banking units that were identified by the Federal Deposit Insurance Corporation (FDIC). The domestic banks used in the study had 100% domestic ownership and the foreign banks used in the study had 50% or more foreign ownership.

The researchers in the study were Thomas O Stanley, Craig A. Roger and Bruce McManis. Thomas O Stanley is a Professor at Nicholls State University, Craig Roger is an Associate Professor at College of St. Catherine, and Bruce McManis is a Department...