On the Persistence of Relationship Banking within a Bank-Based Financial System

The overall financial market environment has undergone a dramatic shift in the past few years as a result of the recent global financial crisis, associated regulatory changes, and new market participants. This study undertook an online survey of 12,169 SMEs from all major sectors of the German economy. A total of 576 completed and usable questionnaires were collected. The aim of this study is to explore the nature of lending relationships in light of the past financial crisis, the resultant structural changes, and the competition of new entrants into the financial system. The study shows that relationship lending is essential for ensuring financial market stability.