Cited by 1,590Banking stability, regulation, efficiencyCorporate Finance and GovernanceBanking Systems and Strategies

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Can Relationship Banking Survive Competition?

Boot, Arnoud W. A., Thakor, Anjan V.·2000·The Journal of Finance

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Abstract

How will banks evolve as competition increases from other banks and from the capital market? Will banks become more like capital market underwriters and offer passive transaction loans or return to their roots as relationship lending experts? These are the questions we address. Our key result is that as interbank competition increases, banks make more relationship loans, but each has lower added value for borrowers. Capital market competition reduces relationship lending (and bank lending shrinks), but each relationship loan has greater added value for borrowers. In both cases, welfare increases for some borrowers but not necessarily for all.

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Financial intermediation and delegated monitoring
Diamond, D. W. (1984) · The Review of Economic Studies · doi:10.2307/2297430 · Cited by 8,476

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Regulatory constraint and small business lending: do innovative peer-to-peer lenders have an advantage?
HAMARAT, Ç., & Broby, D. (2022) · Financial Innovation · doi:10.1186/s40854-022-00377-y · Cited by 15
“This follows the observations of Boot and Thakor (2000) regarding the development of relationship lending when there is less interbank competition.”
Background
Central Hub M&A Advisors*
Yawson, A., & Zhang, H.-Z. (2021) · doi:10.1093/rof/rfaa043 · Cited by 12
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Almahadin, H. A., Kaddumi, T., & AL-Kilani, Q. (2020) · Banks and Bank Systems · doi:10.21511/bbs.15(3).2020.19 · Cited by 12
“Boot and Thakor (2000) posit that large banks work toward keeping their reputation and competitive position in the market and, therefore, focus on granting credits to a special category of clients, which maximizes their market value and increases their investments’ returns, thus, realizing…”
Technology is changing lending: Implications for research
Sutherland, A. (2020) · Journal of Accounting & Economics · doi:10.1016/j.jacceco.2020.101361 · Cited by 12
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Market structure, outer versus inner competition: the case of Italy’s credit coop banks
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Relationship and Transaction Lending: New Evidence and Perspectives
Gambacorta, L. (2016) · Emerging Markets Finance and Trade · doi:10.1080/1540496x.2016.1105682 · Cited by 12
“A second strand of the literature underscores the monitoring role of R-banks (Boot and Thakor 2000; Hauswald and Marquez 2006; Holmstrom and Tirole 1997).”
Background
The quest for growth: The impact of bank strategy on interest margins
Arnold, I., & Ewijk, S. D. V.-V. (2012) · doi:10.1016/j.irfa.2012.06.005 · Cited by 12

Authors: Boot, A. W. A., & Thakor, A. V.
Affiliations: Tinbergen Institute (NL)
ORCID: Boot, Arnoud W. A.
Thakor, Anjan V.
Venue: The Journal of Finance
Publisher: Wiley
Published: 2000-04
Volume: 55
Issue: 2
Pages: 679-713
ISSN: 0022-1082 (ISSN-L)
1540-6261
DOI: 10.1111/0022-1082.00223
OpenAlex: W2167141920
Cited by: 1,590
References: 0
Citations by year: 2026: 54 · 2025: 80 · 2024: 78 · 2023: 82 · 2022: 60 · 2021: 62 · 2020: 76 · 2019: 76 · 2018: 76 · 2017: 53 · 2016: 62 · 2015: 73 · 2014: 53 · 2013: 81 · 2012: 63
FWCI: 59.16
Type: journal article
Language: en
Open access: closed
Licence: onlinelibrary.wiley.com/termsAndConditions#vor (vor, 990 d)
Locations: The Journal of Finance (publishedVersion)
RePEc: Research Papers in Economics (submittedVersion)
OpenGrey (Institut de l'Information Scientifique et Technique) (submittedVersion)
UvA-DARE (University of Amsterdam) (submittedVersion)
Data Archiving and Networked Services (DANS) (submittedVersion)
Topics: Social Sciences › Economics, Econometrics and Finance › Finance › Banking stability, regulation, efficiency
Social Sciences › Economics, Econometrics and Finance › Finance › Corporate Finance and Governance
Social Sciences › Economics, Econometrics and Finance › Finance › Banking Systems and Strategies
Keywords: relationship banking, relationship lending, bank competition, capital market competition, bank lending, borrower welfare, underwriting

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Can Relationship Banking Survive Competition?

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