Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/261218 
Year of Publication: 
2021
Series/Report no.: 
Cardiff Economics Working Papers No. E2021/25
Publisher: 
Cardiff University, Cardiff Business School, Cardiff
Abstract: 
A growing literature addresses the costs and benefits associated with relationship banking, articularly for smaller firms, but with much of this work focused on normal trading conditions. Covid-19 rovides an ideal testbed to explore the resilience of relationship banking. We examine whether the presence of closer pre-Covid ties between SMEs and their banks helps in accessing funds in the Covid-19 pandemic period. Then are ties between relationship bankers and SME borrowers a case of ‘true love’ or rather are the parties more akin to ‘fair-weather friends’? Data from the UK SME Finance Monitor from 2018Q2-2020Q3 is used to examine this question. Our analysis suggests that relationship banking was important for the acquisition of bank credit pre-Covid-19 but was of limited influence in post-Covid-19 lending behaviour. Banks treated SMEs that had a good relationship with them in the same way as those that did not and with public interventions to support lenders material in this.
Subjects: 
Covid-19
Relationship Banking
SMEs
JEL: 
G21
G28
G40
Document Type: 
Working Paper

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