Whats In a Relationship The Case of Commercial Lending Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

This article provides an overview and analysis of the scientific literature on the relationship lending to small and medium enterprises (SMEs). It should be noted here that the relationship lending depends on soft (non-quantifiable) information, while the other "lending technology" depends on hard (quantitative) information. Based on the relative benefits and costs, relationship lending may be better suited for certain types of small and medium-sized businesses with an alternative lending technologies better suited to others. Also discussed in this article some interesting managerial and public policy issues. The dimension of the bank management, credit relations can create a special problem for risk managers. Measured by public policy, the data suggest that the relationship lending can be better addressed small community banks, consolidation of the banking sector, however, can threaten the existence of such providers. Counter-intuitively, it is possible that competitive banking sector can not be a better medium for relationship lending. Finally, this paper highlights the potentially interesting differences in the relative importance of relationship lending and other lending technologies in different countries with different financial architecture and considers potentially powerful link between lending relationships and monetary policies and other financial turmoil. "Hide
by Gregory F. Udell Source: Business Horizons 11 pages. Publication Date: March 1, 2008. Prod. #: BH267-PDF-ENG