Time: 13:00-15:00 (UK Time), Wednesday, 6 October 2021
Presenter: Dr. Tianshu Zhao, Birmingham Business School, UK
Co-authors: Prof. Kent Matthews & Prof. Max Munday, Cardiff Business School, UK
Chair: Prof. Victor Murinde, SOAS University of London
Online venue: Click here to join the seminar on Microsoft Teams (For any inquiry about how to join the online seminar, please contact Dr Meng Xie: xm1@soas.ac.uk)
Abstract
A growing literature addresses the costs and benefits associated with relationship banking, particularly for smaller firms, but with much of this work focused on normal trading conditions. The Covid-19 pandemic provides 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 Q2 2018-Q3 2020 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.
Key Words: Covid-19, Relationship Banking, SMEs
JEL Codes: G21, G28, G40
Authors
Dr Tianshu Zhao is an applied micro-economist with a particular interest in exploiting the micro-economic foundation of the financial development on economic growth. Her recent research focuses on the spatiality of the financial system for regional disparity in entrepreneurial activity, financial inclusion, and social inequality. Dr Tianshu Zhao has publications in top journal articles in the field of Economics, Banking and Finance, such as Journal of Banking and Finance, Regional Studies, The Review of Economics and Statistics and Journal of Economic Geography.
Professor Kent Matthews is Sir Julian Hodge Professor of Banking & Finance at Cardiff Business School. Kent has worked in the areas of macroeconomic modelling, economic forecasting, economics of banking, and modelling the shadow. He has published in leading economic journals around: Shadow banking and the Chinese macroeconomy; Bank credit and SME financing; Money and banking deregulation in developing economies; Economics of the shadow economy; and Crime and violent injury.
Professor Max Munday is Director of the Welsh Economy Research Unit at Cardiff Business School. His research interests focus on regional economic and policy, economic evaluation, economics of the multinational, and economic development. He is currently directing a five year programme of research with the Development Bank of Wales examining the supply and demand side for SME financing in Wales, and has been leading work examining the effects in Wales of Covid-19 public finance to support SMEs. He has published widely on issues around regional economic policy and regional economic modelling in journals including Journal of Rural Studies, Regional Studies, Ecological Economics, Energy Policy, Geoforum, and Urban Studies.