Catalogue Search | MBRL
Are you sure you want to remove the book from the shelf?
{{itemTitle}}
30,949
result(s) for
"Relationship banking"
Sort by:
An analysis of the SME–bank match made in heaven: the case of New Zealand main banks and their relationship-managed SMEs
Purpose
The purpose of this paper is to answer the increasing calls to analyse how lending relationship between banks and their small- and medium-sized enterprises (SMEs) work. More precisely, the main aim is to investigate the lending approach(es) and criteria used by banks to assess loan applications from their relationship-managed (RM) SMEs’ clients. Other objectives include investigating the level of congruence in terms of lending practices and processes among the sample banks in New Zealand (NZ) and to discern how the assessment of the SME owner/manager is done within the relationship-banking framework.
Design/methodology/approach
The research objectives concern investigating processes and not variances. Thus, a qualitative research approach was used. Extensive data was collected via interviews across representative banks in NZ and thematic analysis was used to analyse the data.
Findings
The findings include a detailed analysis of how relationship banking actually works; how in NZ, the main bank brands use three criteria of lending (financials, security and character) as a framework of assessing loan applications from RM-clients – which is different from the character, capital, capacity, conditions, and collateral (5Cs) that are widely used and discussed as the framework of lending; and an elucidation as to why and how character assessment is different from the other criteria of lending.
Originality/value
To the best of authors’ knowledge, this is the first study to investigate the mechanisms and processes that banks use to deal with their RM-SMEs, show the existence of a different framework of lending other than the 5Cs and attempt an explanation as to why character evaluation is different from that of the other criteria of lending.
Journal Article
Banking in the metaverse: a new frontier for financial institutions
PurposeTechnological advancements have catalyzed disruption in the banking sector. The impact of the metaverse on the banking sector is no exception. In view of this, the current paper aims to provide valuable insights into four key areas (i.e. corporate banking, retail banking, banking employees and public policy) that the metaverse could significantly disrupt.Design/methodology/approachInsights into four key areas of the banking sector that the metaverse could significantly impact were gathered from various invited contributors.FindingsThe invited contributors first introduce the association between their respective key areas with the metaverse. Subsequently, the opportunities and challenges relevant to the key areas were identified. Finally, future research agendas were proposed for the attention of all relevant stakeholders.Originality/valueThe metaverse's impact on key areas of the banking sector is discussed in this paper. Following the metaverse's potentially wide application in the banking sector, insights from the invited contributions offer great value to the relevant stakeholders.
Journal Article
Relationship and Transaction Lending in a Crisis
We study how relationship lending and transaction lending vary over the business cycle. We develop a model in which relationship banks gather information on their borrowers, allowing them to provide loans to profitable firms during a crisis. Because of the services they provide, operating costs of relationship banks are higher than those of transaction banks. Relationship banks charge a higher intermediation spread in normal times, but offer continuation lending at more favourable terms than transaction banks to profitable firms in a crisis. Using credit register information for Italian banks before and after the Lehman Brothers' default, we test the theoretical predictions of the model.
Journal Article
Banking Relationships and Syndicated Loans during the 2008 Financial Crisis
The research shows that banking relationships are important to lending. However, few studies focus on the banking relationships in syndicated loans, although these loans have became a major source of financing. The last financial crisis clearly shows the impacts of credit rationing and tightening credit conditions, even in the syndicated loans market. We investigate whether banking relationships help firms to benefit from better terms for syndicated loans in a chaotic financial environment. Using a sample of syndicated loans arranged from 2003 to 2008 in North America and Europe, we find that firms with a previously developed relationship with a lead bank obtained a lower spread and a longer maturity during the financial crisis but did not benefit from larger loan facilities.
Journal Article
Universal banking powers and liquidity creation
Universal banking powers are permissions for a nation’s banks to provide financial services beyond “plain vanilla” banking activities. Some nations restrict banking activities to only services such as loans and deposits, while others permit commercial banks to also engage in investment banking, insurance underwriting, and/or real estate investment activities. Despite the research and policy importance of this issue, the literature essentially neglects how these powers affect the primary role of banks in creating liquidity for society. We formulate two competing hypotheses as to whether more universal banking powers increase versus decrease domestic bank liquidity creation based on theories of risk absorption, relationship banking, and scope economies/diseconomies. We test which hypothesis empirically dominates using data from 85 nations over 15 years. The data strongly support the hypothesis that universal powers boost domestic bank liquidity creation. These findings are robust to addressing endogeneity, controlling for bank regulations, macroeconomic conditions, and institutional variables, and conducting subsample analyses. We also test for international arbitrage – whether the foreign subsidiaries of banks from more restrictive countries create more liquidity in host countries with fewer restrictions – and find support for this arbitrage. Collectively, these results provide important research and policy implications.
Journal Article
Determinants of Default in P2P Lending
This paper studies P2P lending and the factors explaining loan default. This is an important issue because in P2P lending individual investors bear the credit risk, instead of financial institutions, which are experts in dealing with this risk. P2P lenders suffer a severe problem of information asymmetry, because they are at a disadvantage facing the borrower. For this reason, P2P lending sites provide potential lenders with information about borrowers and their loan purpose. They also assign a grade to each loan. The empirical study is based on loans' data collected from Lending Club (N = 24,449) from 2008 to 2014 that are first analyzed by using univariate means tests and survival analysis. Factors explaining default are loan purpose, annual income, current housing situation, credit history and indebtedness. Secondly, a logistic regression model is developed to predict defaults. The grade assigned by the P2P lending site is the most predictive factor of default, but the accuracy of the model is improved by adding other information, especially the borrower's debt level.
Journal Article
Who Supplies PPP Loans (and Does It Matter)? Banks, Relationships, and the COVID Crisis
We analyze the bank supply of credit under the Paycheck Protection Program (PPP). The literature emphasizes relationships as a means to improve lender information, which helps banks manage credit risk. Despite imposing no risk, however, the PPP supply reflects traditional measures of relationship lending: decreasing in bank size and increasing in prior experience, commitment lending, and core deposits. Our results suggest a new benefit of bank relationships: They help firms access government-subsidized lending. Consistent with this benefit, we show that the bank PPP supply, based on the structure of the local banking sector, alleviates increases in unemployment.
Journal Article
Relationship banking and information technology
Banks have no time for complacency. They need to re-evaluate their competitive advantages in light of profound changes driven by advances in information technology (IT) and competitive pressure from FinTech companies. This article emphasizes that banks should not abolish relationship banking, which nurtures close contact with bank customers. A long-term orientation of relationship banking streamlines incentives and supports the long-term needs of bank customers. However, banks might be lured into transaction banking due to the presence of IT-driven economies of scale and competition from FinTech start-ups and IT companies. In this light, the article evaluates the role of distances, artificial intelligence, and behavioral biases. Implications for stability in banking are explored. We argue that relationship banking can overcome its drawbacks, but it needs to adjust to the new reality in order to survive.
Journal Article
Cross-prefecture expansion of regional banks in Japan and its effects on lending-based income
This paper examines whether Japanese regional banks entering the banking market in other prefectures, including neighboring prefectures, can increase their lending-based income. To stimulate local economies and support local small- and medium-sized enterprises, the current Japanese Government's policies for regional banks require these banks to engage in region-based relationship banking practices. In this study, three lending-based income measures were used as dependent variables, and estimation was made using panel data from Japanese regional banks. As a result, it was determined that regional banks that enter markets in other prefectures experience positive effects in all three lending-based income measures. Moreover, it was determined that regional banks whose headquarters are located in non-urban areas derive greater benefit from their loan businesses upon entry into other prefectures, including neighboring prefectures, where economic activity is more vibrant than regional banks whose headquarters are located in urban areas.
Journal Article