Howorth, Carole and Moro, Andre
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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).
|Item Type:||Conference Item|
|Copyright Holders:||2005 The Authors|
|Keywords:||small firms; bank relationships; trust;|
|Academic Unit/Department:||Open University Business School|
|Depositing User:||Andre Moro|
|Date Deposited:||06 Apr 2009 15:35|
|Last Modified:||24 Feb 2016 03:15|
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