TY  - JOUR
A1  - Baas, Timo
A1  - Schrooten, Mechthild
T1  - Relationship banking and SMEs: A theoretical analysis
JF  - Small business economics : an international journal
N2  - Reliable information on small- and medium-sized enterprises (SMEs) is rare and costly for financial intermediaries. Therefore relationship banking is often considered as the appropriate lending technique. In this paper we offer a theoretical model to analyze relationship banking and the pricing behavior of banks in a Bertrand competition framework with monitoring costs. We show that the lack of reliable information leads to comparable high interest rates even if a long-term relationship between borrower and bank exists. The paper offers a theoretical explanation why SMEs often are faced with borrowing constraints.
KW  - accounting
KW  - financial constraints
KW  - relationship banking
KW  - small and medium sized enterprises
Y1  - 2006
U6  - https://doi.org/10.1007/s11187-006-0018-7
SN  - 0921-898X
VL  - 27
SP  - 127
EP  - 137
PB  - Springer
CY  - Dordrecht
ER  -