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Multiple Banking Relationships: Do SMEs Mistrust Their Banks?

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  • Catherine Refait-Alexandre

    (CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE])

  • Stéphanie Serve

    (CSO - Centre de sociologie des organisations - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, UCP - Université de Cergy Pontoise - Université Paris-Seine)

Abstract

This article focuses on the use of multiple banking relationships by SMEs, a key issue given their strong dependence on bank financing in a context of increasing financial constraints and higher risk of credit rationing since the crisis. We investigate whether the use of multiple banking relationships is explained by firms' characteristics or by the quality of the banking relationship. We exploit the results of an original survey conducted on a sample of French SMEs in December 2012. According to the traditional theoretical framework of multiple banking, we find that older, bigger, and betterperforming firms are more likely to access multiple banking relationships. We further find that innovative firms are more likely to engage in multiple banking relationships. We also highlight the explanatory power of an alternative model based on the quality of banking relationship: when the manager trusts its main bank, or when he is closer to his loan officer, the firm will be less likely to engage in multiple banking relationships.

Suggested Citation

  • Catherine Refait-Alexandre & Stéphanie Serve, 2016. "Multiple Banking Relationships: Do SMEs Mistrust Their Banks?," Working Papers hal-01376901, HAL.
  • Handle: RePEc:hal:wpaper:hal-01376901
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    More about this item

    Keywords

    multiple banking relationships; trust; credit rationing; financial crisis;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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