Relationship Lending Through the Cycle: What Can We Learn from Three Decades of Research?

This survey on Relationship Lending (RL) reviews thirty years of literature in a new analysis framework that considers the alleged benefits of RL in all possible scenarios under which banks and firms could operate from a good time scenario to a scenario of generalized crisis affecting both firms and banks. The number of studies currently conducted on RL in a scenario of prolonged crisis is growing rapidly, confirming that RL remains a viable solution and that it helps both banks and their customers to weather the storm. We also add suggestions on additional dimensions of RL that could be investigated in empirical studies to capture the presence of RL in the credit policy of each bank more effectively and thus better measure its effects on both sides – firm and bank – of the relationship.