This paper investigates bank-borrower relationships in an advanced transition country. The empirical analysis is based on a unique dataset of 121 privatized small and medium-sized Slovenian corporations in the first years following the end of the banking sector’s reorganization (1998–2002). The results reveal the strong dominance of bank funding for small and medium-sized enterprises. Despite this, the firms included in the study are characterized by a small number of bank relationships. The specifics of the transition are moreover reflected in the substantial role of fixed assets that can be put up as collateral. However, the number of bank relationships relates to similar factors that have been proven to influence the number of firm-bank relationships in developed countries. We thus expect that the number of bank relationships in Slovenia will increase with the progress of restructuring and privatization of the enterprise sector and with the integration of financial markets following Slovenia’s entry to the European Union
