The Profitability of Bank-Borrower Relationships

Posted: 27 Sep 2004


This paper investigates the profitability of relationship banking within the context of small business loans made by community banks. Theory implies that competition reduces the benefits of bank-borrower relationships, making relationship loans more risky and less profitable. I present evidence for community banks that is consonant with this implication.

Keywords: relationship lending, small business lending, community banks

JEL Classification: G21, G28

Suggested Citation

Ergungor, Ozgur Emre, The Profitability of Bank-Borrower Relationships. Journal of Financial Intermediation, Vol. 14, pp. 485-512, 2005. Available at SSRN:

Ozgur Emre Ergungor (Contact Author)

affiliation not provided to SSRN

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