The question is whether this is also true for loans to small- and medium-sized enterprises (SMEs). Proponents of public banks argue that only savings banks can guarantee the pro- vision of loans to SMEs. Therefore, the Italian reforms may have impaired the availability of SME loans. Furthermore, the reforms led to a consolidation wave, reducing the number of banks from 1,088 in 1992 to 788 in 2003, and raising the average bank size from 1,014 million Euros in 1992 to 2,754 in 2003 (Engerer and Schrooten 2004, Körnert and Nolte 2005, OECD 2002). Larger banks may be less able to extend loans to small customers be- cause.
