Growth, R&D intensity and commercial lender relationships

By examining access to, and terms of, different types of business loans, this empirical study adds to our understanding of the value of relationships between commerciallenders and business borrowers. Access to operating loans is lower for R&D-intensive firms but it does not depend on growth or duration of lender relationship. For term loans, access to capital is easier for firms which have established lender relationships and are unaffected by growth or R&D intensity. The cost of borrowing is found to be higher for R&D-intensive and growing entrepreneurial firms in the case of term loans, but not for operating loans. The duration of borrower–lender relationship does not impact interest rates for either loan type - a finding that supports the “bank capture” hypothesis: that is, banks internalize benefits from relationship lending