Bank-Corporate Relations: Change Issues in the International Enterprise

Bank-corporate relations or more simply ‘relations’ are the subject of much comment and analysis by many different groups including corporate finance directors and treasurers, bankers, financial economists and national policy makers. This paper is restricted to corporate problems concerning recent changes in banking relations. The case study research method has been used to develop theoretical generalisations of the relations change process. Multiple cases, reflecting much diversity in corporate and bank practices, were employed to identify patterns in this change process and to provide explanations in a wide range of circumstances. Descriptions of the nature of relations, environmental change, corporate change, and changes in bank relations were drawn out from the case study data. The data indicated that close bank relations are a stable component of the case firm's financial policy and are part of larger corporate system for managing financial market uncertainty. The data are also discussed in the context of a contingency framework in an attempt to place change in relations in a wider explanatory framework. The illumination of this change process is important for both corporate finance policy makers and for their banking partners. It is also important for corporate finance academics in that it provides new insight into a little studied field in the crucial boundary area between a firm and financial markets.