Do Length, Trust Or Concentration Matter In Credit Renewal? The Case Of Smes In Romania
Abstract
Small and medium enterprises (SMEs) are recognized for their important role in economic development, but this recognition does not resolve the essential problems of the SME sector. Among the problems faced by SMEs are the insufficient or inadequate funding, the lack of availability of financial institutions or private equity investors to meet SMEs financing requirements. As some recent studies revealed, the access to sufficient and appropriate funding for SMEs is still an essential issue even for EU countries, the access being limited by various demand and supply constraints and imperfections. This paper approaches the issue of SMEs financing by investigating the main factors influencing the quality of the banking relationship. We undertook an extended survey-based research, on Romanian SMEs, as to analyse the main determinants of bank relationship, i.e. trust, loyalty, length. Based on a multiple linear regression and using the method of ordinary least squares, we found that SMEs benefit from more favourable treatment from banks due to trust in the managers/owners of the companies and to the effects of long-term relationships. The results we obtained are in line with other similar researches but also as a critical interpretation of the role and objectives of the banks related to SMEs perspective and expectations.
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