The Influence of Relationship Lending on SMEs Loan Repayment Performance

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dc.contributor.authorMori, Neema
dc.contributor.authorNg´urah, Godfrey
dc.date.accessioned2021-06-17T13:29:22Z
dc.date.available2021-06-17T13:29:22Z
dc.date.issued2021
dc.description.abstractThe study examined the influence of relationship lending on repayment performance of small- and medium-enterprise (SME) credit facilities. Four hypotheses were developed and tested using data from 395 sampled borrowers of the largest Tanzanian bank. Data for independent variables were obtained through an administered questionnaire while the data for dependent variable were obtained from the borrowers’ records with the bank. Descriptive and econometric analyses were conducted. Findings show that length and depth of relationship between bank and customers positively and significantly influence the repayment performance. Contrary to other empirical works, the findings revealed the scope of the relationship has no influence on repayment performance, while proximity has a negative association with repayment. The article contributes to the debate over the challenges of ex ante selection (adverse selection) and ex post action (moral hazards) by examining an aspect of trust. The bank and the borrower need to develop and cultivate relationship for the loan to perform well; hence, establishing mutual trust and building a long-term relationship is ideal. The article also contributes to the concept of social collateral which has not received much attention in the literature. With the current effects of COVID-19 on the banking and SME sectors, a major mitigator is to rely on their relationship banking for loan repayment, restructuring, and additional loans to boost businesses. Focusing on transactional banking might prove difficult when turmoil and unexpected pandemic like COVID-19 hits the bank and the firm.en_US
dc.identifier.citationMori, Neema; Godfrey Ng´ura (2021). The Influence Of Relationship Lending On SMEs Loan Repayment Performance. Emerging Economies Studies. https://doi.org/10.1177/2394901520977461en_US
dc.identifier.doihttps://doi.org/10.1177/2394901520977461
dc.identifier.urihttp://hdl.handle.net/20.500.11810/5777
dc.language.isoenen_US
dc.publisherSageen_US
dc.subjectRelationship lendingen_US
dc.subjectSMEsen_US
dc.subjectTanzaniaen_US
dc.subjectRepaymenten_US
dc.titleThe Influence of Relationship Lending on SMEs Loan Repayment Performanceen_US
dc.typeJournal Article, Peer Revieweden_US
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