Research Article
The Role of Relationship Lending in SMEs Funding
@INPROCEEDINGS{10.4108/eai.5-8-2020.2301201, author={Muhammad Fuad}, title={The Role of Relationship Lending in SMEs Funding}, proceedings={Proceedings of the 2nd International Conference of Business, Accounting and Economics, ICBAE 2020, 5 - 6 August 2020, Purwokerto, Indonesia}, publisher={EAI}, proceedings_a={ICBAE}, year={2020}, month={10}, keywords={relationship lending; smes funding capital access funding availability}, doi={10.4108/eai.5-8-2020.2301201} }- Muhammad Fuad
Year: 2020
The Role of Relationship Lending in SMEs Funding
ICBAE
EAI
DOI: 10.4108/eai.5-8-2020.2301201
Abstract
The issue of SMEs funding has been widely discussed by international scholars. One important issue is the access to get funding. Many studies have too narrowly focused on the supply side of the capital. However, To look at the problem of SMEs funding deeply, a review on the demand side should be done further. On the supply side, banks have to deal with the problem of asymmetry information and agency behavior, while on the demand side, owners‘ control has been the issue. The owners are often found reluctant to add capital to keep their firms in their control. Finally, this review gives the main solution to this problem by promoting relationship lending to minimize the disadvantages that possibly arise in conventional loan transactions. Some steps in creating good and conducive business environment and banking system need to be done to support the idea.