This paper presents a study and analysis of the academic literature on lending to small and medium enterprises (SMEs) Relationships. It should be noted here that the loan relationship depends on soft information (not quantifiable), while “technology ready” other dependent data disc (quantifiable). Based on the benefits and costs of the loan relationship may be best suited for certain types of SMEs with others more suitable loan alternative technologies. Also discussed in this article are management issues and interesting public policy. About the size of bank management., Loan relationships can create a particular challenge for risk managers on public policy dimension, it appears that the loan relationship can be best done by small community banks, the consolidation of the banking industry, without But it could endanger the presence these providers. Counter intuitively, it is possible that competition in the banking sector may not be the best environment for the credit relationship. Finally, this article highlights the differences of potential interest in the relative importance of relationship lending and other lending technologies in countries with different financial architectures, and examines a potentially powerful link between loans and the relationship of monetary policy and other monetary shocks.
by
Gregory F. Udell
Source: Business Horizons
11 pages.
Publication Date: March 1, 2008. Prod #: BH267-PDF-ENG
What’s in a relationship? For solving the case of commercial loans
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