The Effect of Firm Status on Banking Relationships and Loan Syndication

This chapter explores the relationship between banks and firms. The bargaining power of small firms with lending institutions has increased since the 1980s, since large banks have moved down-market to serve them. Large firms have been able to take their banks’ willingness to lend to them for granted. It is argued that the power of main banks relative to their firms will erode, and the system will evolve into something different. This will include a broadening of a firm’s banking relationships to close relationships with several core banks.