Systems of Banking and Production in Argentina
Vctor Fernndez, Carolina Lauxmann and Julio Tealdo
Sectorial Financing. Primary Industrialization Patterns, Concentrated and Foreignized
Vs. Dynamism, Decentralization and Endogeneity ( ...continuation )

Figure 14. Most Representative Sectors Within the Manufacturing Industry of Large Companies.
Relative Average Participation (1993-2001 and 2002-2009)
Source: Prepared by the authors, based on information from indec, Large Companies.

According to available information, we can state that the most concentrated industrial branches of the economy are the greatest beneficiaries of loans from the financial banking system. Although the data is not sufficient to conclude that the large businesses effectively take credit from the banking sector, the difficulty for smes15 in obtaining financing would be an additional supporting element to infer this.

The lack of statistics to precisely calculate the percentage of financing that the SME sector receives over the total financial system loans means that we will use a methodology developed by Garca (1996) and later used by the Center for Economics and Finance for the Development of Argentina (cefid-ar)16 with the goal of reasonably estimating the volume of loans granted to this type of business. Analyzing the evolution of sme financing using the said criteria, we observe that there have been no favorable developments for small and medium-sized business owners. In the convertibility era, they received about 20% of total credits from the financial banking system, while in post-convertibility, this number has not even reached 19% (Bleger and Borzel, 2004).

15 According to Law 25.300 and its amendments, smes are defined as a function of their billing volume. A micro-enterprise has annual billing no higher than $900,000; a small business has sales between $900,001 and $5,400,000; a medium-sized business has earnings in between %5,400,001 and $43,200,000 and a large business has billings greater than $43,200,000.

16 The cefid-ar does a quarterly estimate of the loans to smes based on loan intervals published by the bcra. This process considers small and medium-sized businesses whose debts with the financial banking sector are greater than $500,000, although starting in 2010, the available amount of commercial portfolios changed, and as such, it begins at $750,000, but no higher than $5,000,000. Although this estimation criterion might be questionable given that, as Kulfas (2009) points out, there may be large businesses with debts lower than the specified amount, its very improbable that sme s exist with financing higher than said quantity. This methodology provides a reasonable criterion to estimate the participation of sme s in the credit market, and is used by various expert authors on this subject (for example: Cibils and Allami, 2010; Kulfas, 2009).