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Paper info: Business Relationships Dynamics and (In)Stability - A Comparative Case Study in Corporate Banking

Title


Business Relationships Dynamics and (In)Stability - A Comparative Case Study in Corporate Banking

Authors


Joao Proenca
University of Porto
Portugal
Joao Proenca and
Luis de Castro
Lisboa University
Portugal
Luis de Castro

Place of Publication


The paper was published at the 20th IMP-conference in Copenhagen, Denmark in 2004.

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Abstract


This paper looks at the evolution of business banking relationships regarding thestability of the volume of trade between corporate clients and their banks. Ten cases of dyadicrelationships were studied. For each relationship, we looked at the variations in trade volumeboth within calendar years (short periods of time) and throughout the duration of therelationship (long periods of time). Theses cases were compared in terms of their atmospheres(co-operation, accessibility, commitment, trust and conflict), the strength and the kind of bonds,and the existence (or not) of connected relationships. Both the bonds between clients and banks,and those to connected bank relationships seem to contribute to the stability of relationships.Also, there is no relation between the stability of a banking relationship and its atmosphere.Finally, ten factors were identified that can interfere with relationships for short periods of time:three factors concern the client (bargaining behaviour, power, and financial and economicsituation), two factors concern the bank (personnel turnover and risk policy), and another twohave to do with the transactions (cost, and financial and economic risk). Finally, three factorsare ?external? to the relationships (connected relationships, market competitiveness, and sociopolitical/legal factors). Positive and negative impacts on relationships stability are discussed.