Financial Crisis : Its Effect on Existing Bank-SME Relationships

Purpose: The value of relationship building is well documented in the literature, where a number of benefits seem to accrue for both interacting parties. This is also the case for Bank-SME relationships. However, the recent financial crisis is expected to have a significant impact on the underlying dynamics of such relationships and as such, this paper models the expected effect and proposes a number of recommendations to reduce the crisis potential effect.Approach: The paper utilises literature from both banking and finance and relational studies, on the basis of which a conceptual framework is developed and recommendations are proposed.Findings: Some particular recommendations are discussed relating to various aspects of the relationship itself, including changes in the communication mode as well as changes relating to strategic aspects such as reformulating facets of HRM to enhance the relationship.Originality/value: The paper addresses a hot topic, in both academic and managerial circles, and offers insights on both the expected effect of the recent crisis on Bank-SME relationships and on actual ways of dealing with the problem. To this end, it integrates different cross-functional management aspects and is therefore expected to be of interest to both academics and practitioners