The Value of Relationship Lending: Small Banks in an Era of Consolidation

Bongini, Paola; Battista, Maria Luisa Di; Zavarrone, Emma

doi:10.1111/j.1468-0300.2007.00184.x

Cited by 17 publications

(8 citation statements)

References 41 publications

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“…Cooperative and savings banks are an important part of the banking system. These regional, often small stakeholder banks tend to focus on local markets and niche market segments, which provides them with a competitive advantage over larger rivals [5,7,19,44]. They are a major source of funding for small businesses and hold a significant market share in relationship lending both in the USA [20,47] and in Europe [35,43,44,49].…”

Section: Introductionmentioning

confidence: 99%

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Determinants of mergers and acquisitions among Finnish cooperative and savings banks

2021

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This study is the first to examine mergers and acquisitions among small, regional stakeholder banks that belong to the same group. Using data on Finnish unlisted cooperative and savings banks, we investigate the relationship between bank-specific factors and the likelihood of a bank being an acquirer or an acquisition target. We find that large banks tend to acquire small and inefficient banks. Additionally, we examine the loan growth and find a negative (positive), statistically significant association with the likelihood of a bank being an acquisition target (acquirer). Finally, we document an increase in the likelihood of a bank being an acquisition target subsequent to an increase in the share of net fees and commission income against total assets.

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Section: Introductionmentioning

confidence: 99%

“…However, the ongoing technological progress, product and service innovations, changes in customer preferences and intensifying competition have urged smaller banks to pursue growth [7,20,27]. One option to pursue growth is to merge with rivals.…”

Section: Introductionmentioning

confidence: 99%

Determinants of mergers and acquisitions among Finnish cooperative and savings banks

2021

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“…This variable is calculated as the presence of branches of the bank not in the provincial capitals (i.e. municipalities) like Bongini et al (2007). The calculation formula used is as follows: where j varies with the provinces in which the i-th bank has a local presence and can reach the number of provinces equal to k, the maximum of 103 (or local presence of the bank in all Italian provinces).…”

Section: <Table 1 About Here>mentioning

confidence: 99%

Bank Size, Functional Distance and Loss Given Default Rate of Bank Loans

Cotugno

Stefanelli

2011

International Journal of Financial Research

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Most of the studies available on relationship lending focuses on the benefits for borrowers and neglects those achievable for banks. In particular, empirical studies on the benefits achieved for banks in terms of loans recovery rate, in connection with loss given default rate, are very few. In contrast, choosing the best approach to managing loans is crucial in the current credit market considering the high deterioration in quality of bank loans.
This paper empirically tests whether the banks more oriented towards a relationship lending approach report a lower level of loss given default. Bank size and functional distance are used to measure the relationship lending approach in banks.
This paper takes into account the Italian banking system and the effectiveness of their debt recovery processes during the 2005-2008 period. The data has been collected by ABI Banking Data and Bank of Italy. The empirical analysis highlights that banks more oriented in the relationship lending model have a greater capacity to recover bad loans. These findings have some managerial implications.

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Section: <Table 1 About Here>mentioning

confidence: 99%

Bank Size, Functional Distance and Loss Given Default Rate of Bank Loans

Cotugno

Stefanelli

2011

SSRN Journal

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Most of the studies available on relationship lending focuses on the benefits for borrowers and neglects those achievable for banks. In particular, empirical studies on the benefits achieved for banks in terms of loans recovery rate, in connection with loss given default rate, are very few. In contrast, choosing the best approach to managing loans is crucial in the current credit market considering the high deterioration in quality of bank loans. This paper empirically tests whether the banks more oriented towards a relationship lending approach report a lower level of loss given default. Bank size and functional distance are used to measure the relationship lending approach in banks. This paper takes into account the Italian banking system and the effectiveness of their debt recovery processes during the 2005-2008 period. The data has been collected by ABI Banking Data and Bank of Italy. The empirical analysis highlights that banks more oriented in the relationship lending model have a greater capacity to recover bad loans. These findings have some managerial implications.

show abstract

The Value of Relationship Lending: Small Banks in an Era of Consolidation

Cited by 17 publications

References 41 publications

Determinants of mergers and acquisitions among Finnish cooperative and savings banks

Determinants of mergers and acquisitions among Finnish cooperative and savings banks

Bank Size, Functional Distance and Loss Given Default Rate of Bank Loans

Bank Size, Functional Distance and Loss Given Default Rate of Bank Loans

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