search query: @freeterm relationship banking / total: 5
reference: 2 / 5
| Author: | Baas, T. Schrooten, M. |
| Title: | Relationship banking and SMEs: A theoretical analysis |
| Journal: | Small business economics
2006 : SEP/OCT, VOL. 27, 2-3, p. 127-137 |
| Index terms: | accounting banks small and medium-sized enterprises (SMEs) theories models |
| Freeterms: | relationship banking |
| Language: | eng |
| Abstract: | For financial intermediaries, reliable information on small- and medium-sized enterprises (SMEs) is costly and rare. That's why relationship banking (hereafter as: r-bankg.) is often considered as the appropriate lending technique. This paper provides a theoretical model to analyze r-bankg. and the pricing behaviour of banks in a Bertrand competition framework with monitoring costs. It is shown that the lack of reliable information leads to comparable high interest rates even if a long-term relationship exists. A theoretical explanation is offered why SMEs often are faced with borrowing constraints. |
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