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The Impact of Durable Relationship with Banks when Crisis Hits

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  • Tamer Bakiciol

Abstract

Firms develop relationships with their banks in order to ensure access to financing when credit conditions deteriorate in time of crisis. I investigate the effect of bank-firm relationships in Turkey where 90 percent of a firm’s financial debt is obtained through bank loans. I find that adjusted for loan terms and firm-fixed effects, borrowers with past relationships with incumbent banks have lower risk-adjusted financing costs. Furthermore, lower financing costs associated with relationship are even more pronounced during the 2008–2009 financial crisis.

Suggested Citation

  • Tamer Bakiciol, 2017. "The Impact of Durable Relationship with Banks when Crisis Hits," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 53(11), pages 2609-2624, November.
    • Handle: RePEc:mes:emfitr:v:53:y:2017:i:11:p:2609-2624
    DOI: 10.1080/1540496X.2017.1326027
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    Cited by:

    1. Aysan, Ahmet Faruk & Disli, Mustafa, 2019. "Small business lending and credit risk: Granger causality evidence," Economic Modelling, Elsevier, vol. 83(C), pages 245-255.
    2. Edward Kiringa & Fredrick W.S. Ndede & Argan Wekesa, 2021. "Relationship lending and access to financial services by SMEs in Kenya," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 10(5), pages 235-244, July.

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