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The Determinants of Bank-Firm Relationships: Overview, Evolution, and Challenges

In: Adapting to Change

Author

Listed:
  • Egidio Palmieri

    (University of Udine)

  • Enrico Fioravante Geretto

    (University of Udine)

Abstract

This chapter analyses the evolving dynamics between banks and firms. It begins by examining the bank-firm relationship from before 1995, characterized by mutual trust and personal interactions, through to the period between 1995 and 2010, where the relationship gained complexity due to global banking practices and judicial systems. The phase from 2010 to 2023 is marked by banks’ transition towards ethical banking and becoming holistic partners for firms. The chapter also explores conventional finance, focusing on consistent elements like credit rationing, interest rates, and collateral requirements. It introduces the concept of alternative finance, highlighting its impact on traditional banking models and the necessity for banks to innovate in response. The chapter concludes that while basic lending principles remain unchanged, the bank-firm relationship has evolved significantly, influenced by broader financial, societal, and technological trends.

Suggested Citation

  • Egidio Palmieri & Enrico Fioravante Geretto, 2023. "The Determinants of Bank-Firm Relationships: Overview, Evolution, and Challenges," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Adapting to Change, chapter 0, pages 31-62, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-031-50265-1_2
    DOI: 10.1007/978-3-031-50265-1_2
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    More about this item

    Keywords

    Bank-firm relationships; Ethical banking; Credit rationing; Alternative finance models; Financial innovation;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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