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Can relationship banking survive the Spanish economic crisis?

Author

Listed:
  • Gary A. Dymski

    (Leeds Business School University of Leeds)

Abstract

This paper shows that the global financial and economic crisis has jeopardized the viability of relationship banking in Spain, and threatens to undercut this key element in the national structure of productive financial intermediation. The capacity of the Spanish banking system to provide relationship-banking services, which was threatened even before the crisis, is now compromised by four mutually-reinforcing forces: a tendency for credit flows to be higher in central regions and lower in peripheral ones; the shift of liquidity to central regions in financialcrisis periods; the asymmetric protection offered to the large financial intermediaries that are least proficient at (or interested in) spatially-distributed relationship banking; and the forced recapitalization of Spanish banks, which selects against small and outlying banks and requires increased minimum operating scale. These four forces constitute a quadruple ratchet effect, reinforcing the centralization of credit flows while reducing relationship-banking intermediation capacities in peripheral regions and lower-income areas.

Suggested Citation

  • Gary A. Dymski, 2013. "Can relationship banking survive the Spanish economic crisis?," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 84(03), pages 182-205.
    • Handle: RePEc:ekz:ekonoz:2013308
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    Citations

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    Cited by:

    1. Gila-Gourgoura, E. & Nikolaidou, E., 2017. "Credit Risk Determinants in the Vulnerable Economies of Europe: Evidence from the Spanish Banking System," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 10(1), pages 60-71, March.
    2. José Manuel Pastor & Jose M. Pavía & Lorenzo Serrano & Emili Tortosa-Ausina, 2017. "Rich regions, poor regions and bank branch deregulation in Spain," Regional Studies, Taylor & Francis Journals, vol. 51(11), pages 1678-1694, November.

    More about this item

    Keywords

    Spanish economic crisis; relationship banking; cajas; ethnic banking; subprime crisis; small and medium enterprises;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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