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Bank–SMEs relationships and banks’ risk-adjusted profitability

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  • Fredriksson, Antti
  • Moro, Andrea

Abstract

This research investigates how SME performance, the typology of loans and the length and scope of relationships between small banks and SMEs affect the margin adjusted for the risk that each customer generates. After analysing 4285 firm-year observations from Finnish banks, the quality of a SME’s performance is found to be the major factor in explaining the risk-adjusted profitability of banks. However, the length and scope of a relationship and the loan dimensions also play an important role.

Suggested Citation

  • Fredriksson, Antti & Moro, Andrea, 2014. "Bank–SMEs relationships and banks’ risk-adjusted profitability," Journal of Banking & Finance, Elsevier, vol. 41(C), pages 67-77.
  • Handle: RePEc:eee:jbfina:v:41:y:2014:i:c:p:67-77
    DOI: 10.1016/j.jbankfin.2013.12.026
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    1. repec:eee:jbfina:v:80:y:2017:i:c:p:119-134 is not listed on IDEAS
    2. repec:eee:finsta:v:31:y:2017:i:c:p:136-153 is not listed on IDEAS
    3. Aleksandr Kljucnikov & Jaroslav Belas, 2016. "Approaches Of Czech Entrepreneurs To Debt Financing And Management Of Credit Risk," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 11(2), pages 343-365, June.

    More about this item

    Keywords

    Small bank performance; Relationships between small banks and SMEs; Risk-adjusted profitability;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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