Details

Autor(en) / Beteiligte

• Zhao, Tianshu
• Matthews, Kent
• Munday, Max

Titel

Neither true nor fairweather friend: relationship banking and SME borrowing under Covid-19

Ist Teil von

• The European journal of finance, 2023-11, Vol.29 (16), p.1957-1974

Ort / Verlag

London: Routledge

Erscheinungsjahr

2023

Quelle

Taylor & Francis Journals Auto-Holdings Collection

Beschreibungen/Notizen

• A growing literature addresses the costs and benefits associated with relationship banking, particularly for smaller firms, but with much of this work focused on normal trading conditions. Covid-19 provides an ideal testbed to explore the resilience of relationship banking. We examine whether the presence of closer pre-Covid ties between SMEs and their banks helps in accessing funds in the Covid-19 pandemic period. Then are ties between relationship bankers and SME borrowers a case of 'true love' or rather are the parties more akin to 'fair-weather friends?' Data from the UK SME Finance Monitor from 2018Q2-2020Q3 is used in this paper to examine this question. Our analysis suggests that relationship banking was important for the acquisition of bank credit pre-Covid-19 but was of limited influence in post-Covid-19 lending behaviour. Banks treated SMEs that had a good relationship with them in the same way as those that did not and with public interventions to support lenders material in this.