The Effect Of Bank-Enterprise Cooperation And Interpersonal Relationships On Relationship Lending

SMEs(Small and Medium Sized Enterprises)is an important part of China's socialist economic system.It has played an irreplaceable role in promoting economic growth,absorbing the workforce and promoting technological innovation and has become an important force to promote China's national economy healthy,stable and rapid development.However,depart from its important role in economy,there are a lot of factors restricting its development due to its own characteristics and information asymmetry,and the difficulties in financing is the main factor that restrict its survival and development.Relationship lending' can significantly improve the financing situation of SMEs,which has extensive research abroad,while research in China is still in the initial stage,and there is even less empirical studies.This paper will be based on the existing research,combined with China's national conditions,and discuss relationship lending and the terms of contracts from the perspective of both theoretical and empirical methods.Through the cost-and-benefit analysis,it point out that relationship lending is an inevitable choice for banks and SMEs to seek win-win cooperation,and then summarize the key factors that affect SMEs loan conditions.In the empirical study,it construct two dimensions(Cooperation between banks and SMEs,interpersonal relationships)of the relationship between banks and SMEs,five variables(length of relationships,intensity of competition,scope of relationships,exchange frequency between banks and SMEs,relationship source level),and construct a multiple linear regression model of SMEs credit availability,a multiple linear regression model of financing costs and a Probit regression model of collateral requirements to deeply probe how the relationships between bank and SMEs affect SMEs financing.The study shows that relationship lending is an inevitable choice for banks and SMEs to seek win-win cooperation,and there exist two effects in relationship lending:relationship effect and lock-in effect.How relationships affect SMEs credit availability,financing costs and collateral requirements depends on the strength of two effects.Firstly,if the length of relationships is longer,the number of corporate banks with SMEs is smaller,the service provided by the bank and used by SMEs is wider,then the credit availability of SMEs is higher;however the higher relationship source level is,the lower credit availability of SMEs achieves.Secondly,as the corporation between banks and SMEs get closer,bank will raise interest rates on loans and reduce its collateral requirements;the more service SMEs have used,the lower its loan rate is,but the higher its collateral requirement is.Thirdly,if SMEs has friendship with higher level bank loan officers,its loan rate will be lower,and collateral requirement will be higher;also,if SMEs has more exchange with bank,it will get lower loan rate.