Location of Repository

Benevolence, integrity and ability: a survey of Italian SMEs and banks

By Carole Howorth and Andre Moro

Abstract

Access to appropriate finance is crucial for the start-up, survival, growth and development of firms. The majority of entrepreneurs, especially in smaller firms, are reliant on the bank system. Previous research examines relationships between firms and banks from a transaction costs economics and/or agency theory point of view. This postulates an opportunistic base to human behaviour. An alternative set of assumptions about human nature encompass altruism and trust. Trust is relevant because it is a way to reduce complexity; it is the 'lubricant' in exchanges; it is crucial in situations of risk or high pressure, and it is among the building blocks of social capital, which have been shown to underpin access to resources for entrepreneurs. Trust is based on an assessment of ability, benevolence and integrity. This paper tests whether there is a relationship between trust and the cost of finance (i.e. interest rates)

Year: 2005
OAI identifier: oai:oro.open.ac.uk:15700
Provided by: Open Research Online

Suggested articles

Preview


To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.