The role of central banks  Central banks assume a crucial role when market liquidity dries up and funding constraints cast doubt on the solidity and safety of financial institutions. Central banks have to prevent or limit systemic risks. In essence this entails addressing adverse dynamics and preventing the collapse of financial intermediation.
Community banks, which rely on personal relationships and knowledge of the local market to assess credit risks, have long been a source of funding for small business. The development of more-sophisticated techniques in small business loan underwriting, including the use of credit scoring, has helped make small business lending more attractive to larger institutions as well (Cowan and Cowan, 2006).