Bank commitment to an entrepreneur facing the risk of bankruptcy

Julien Cusin and Vincent Maymo
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Julien Cusin: IRGO - Institut de Recherche en Gestion des Organisations - UB - Université de Bordeaux - Institut d'Administration des Entreprises (IAE) - Bordeaux
Vincent Maymo: IRGO - Institut de Recherche en Gestion des Organisations - UB - Université de Bordeaux - Institut d'Administration des Entreprises (IAE) - Bordeaux

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Abstract: An extensive body of work explains the basis of bank decisions at the time of entry into a relationship. In contrast, there has been far less research on the evolution of bank relationships over time. In the present study, we attempt to understand how a bank responds when a small business client begins to struggle and faces the risk of bankruptcy. To this end, we conducted a qualitative study on the single case of a French mutualist bank. First, our model on bank commitment highlights the oscillation and arbitrage over time between a business management and a risk management rationale. It then underscores the importance of intuition for small business advisors. This intuition or "feeling" depends on the meaning that small business advisors afford to the entrepreneur's financial difficulties, and the entrepreneur's attitude as a manager and client. In addition, we enrich the relational lending model by raising the issue of the psychological contract between the small business advisor and the entrepreneur for example.

Keywords: Banker; Commitment; Entrepreneur in difficulty; Risk; Support; Banquier; Engagement; Entrepreneur en difficulté; Risque; Soutien (search for similar items in EconPapers)
Date: 2019-04-10
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Published in Journal of Small Business & Entrepreneurship, 2019, pp.1-23. ⟨10.1080/08276331.2019.1596399⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03253971

DOI: 10.1080/08276331.2019.1596399

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