Journal of Financial Services Research

, Volume 31, Issue 2, pp 153-171

First online:

The Benefits of Relationship Banking: Evidence from Small Business Financing in Finland

  • Janne PeltoniemiAffiliated withDepartment of Accounting and Finance, Faculty of Economics and Business Administration, University of Oulu Email author 

Rent the article at a discount

Rent now

* Final gross prices may vary according to local VAT.

Get Access


Using unique small business credit-file data from a major Finnish bank, I analyze how relationship characteristics are associated with loan interest rates. Data includes the effective loan rate and variables that describe the duration and scope of relationship, collateralization, firm characteristics, bank’s internal risk rating, and loan characteristics. The results show that longer duration tends to lower the cost of credit and that a long-term bank/firm relationship is beneficial especially to high-risk firms. As the relationship matures, the loan premiums for high-risk firms decrease at higher rate than for low-risk firms.


Relationship banking relationship lending small business finance loan pricing collateral