Trust-based relationship banking, and SME financing in the UK

Degryse, Hans, Matthews, Kent ORCID: https://orcid.org/0000-0001-6968-3098 and Zhao, Tianshu 2026. Trust-based relationship banking, and SME financing in the UK. The European Journal of Finance 10.1080/1351847X.2026.2639396

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Abstract

It is well recognized that relationship banking helps to relieve the credit constraints faced by SMEs to access bank finance. Trust is an important part of relationship banking. However, the term trust is nebulous, and relationship banking means different things to different banks and different borrowers. How trust enables the credit market for SMEs through relationship banking is largely unexplored. Using a unique primary dataset of SMEs in the UK, we construct a measure of trust-based relationship banking from the perspective of the borrower that places mutual trust centre stage. We show that trust-based relationship banking is enhanced by the organizational trust in the Relationship Manager, defined by the delegation of operational autonomy. Along with bank, firm, and market factors, trust-based relationship banking helped to reduce the credit constraints faced by SMEs in the decade following the global financial crisis.

Item Type:	Article
Date Type:	Publication
Status:	In Press
Schools:	Schools > Business (Including Economics)
Publisher:	Informa UK Limited
ISSN:	1351-847X
Date of First Compliant Deposit:	23 March 2026
Date of Acceptance:	26 February 2026
Last Modified:	23 Mar 2026 11:15
URI:	https://orca.cardiff.ac.uk/id/eprint/185941

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