Title: Bank strategy determinants under relationship lending: evidence from the Moroccan credit market
Authors: Abdelati Hakmaoui; Hafssa Yerrou
Addresses: Faculty of Law, Economics and Social Sciences of Aîn Sebaâ, University Hassan II, Beausite, BP 2634 Ain Sebaâ – Casablanca, Morocco ' Faculty of Law, Economics and Social Sciences of Aîn Chock, University Hassan II, Km 8, Route d'El Jadida, BP 5366, Maarif, Casablanca, Morocco
Abstract: This research empirically examines the bank strategy determinants in relationship lending and its impact on credit conditions when dealing with SMEs under an asymmetric information context. We use comprehensive and detailed loan contract information and financial statements from a major Moroccan bank on a sample of 512 Moroccan SMEs. The empirical results show that Moroccan banks, to reduce the problem of information asymmetry, develop a long-term relationship with SMEs allowing, therefore, a gradual transfer of soft information where the first collateral provided and a debt short maturity are key factors. We confirm a complete hold-up problem that the bank takes benefit of as far as the firm has an exclusive or limited number of bank partnerships. Consequently, the firm is charged a higher interest rate and is asked to pledge more collateral.
Keywords: relationship lending; bank strategy; credit conditions; hold-up; Morocco.
International Journal of Business Performance Management, 2021 Vol.22 No.2/3, pp.140 - 158
Received: 08 Jun 2020
Accepted: 21 Oct 2020
Published online: 08 Jul 2021 *