The paper focuses on the role of banking diversity on access to finance for SMEs in the green economy. It demonstrates the relationship between the green economy and SMEs, and argues that access to finance is not just a function of broader macroeconomic factors but also the structure of the banking system. Specifically, it demonstrates that different types of banks, as a result of differences in balance sheets, lending horizons, and local presence, were equipped differently to service SMEs financing needs. In particular, the analysis highlights the role of non‐commercial banks in a diverse banking sector to provide SME lending. Banking diversity contributed to a better servicing of the different financing needs in the economy and ensures a larger stability in lending to SMES during financial instability.
