Relationship Banking and Its Role in Corporate Governance

Banks have comparative advantages in corporate monitoring. And, in developing Asia, banks are the main suppliers of credit since their capital markets are still underdeveloped. In these economies, relationship banking - a close, long-term relationship with major clients - is likely to help banks better monitor their corporate clients and play a governance role for them.

Furthermore, banks in the crisis-hit Asian countries are now in a better position to develop autonomous relationship banking. However, relationship banking has both advantages and risks, as seen from the experience of Japanese main banks.

This paper attempts to identify the main constraints to fostering healthy relationship banking that would enable banks to more effectively monitor their clients. Also presented is the result of a questionnaire survey of the major Korean banks to evaluate the perceptions of bank officers on relationship banking and governance of banks.

The views expressed in this paper are the views of the author/s and do not necessarily reflect the views or policies of the Asian Development Bank Institute nor the Asian Development Bank. Names of countries or economies mentioned are chosen by the author/s, in the exercise of his/her/their academic freedom, and the Institute is in no way responsible for such usage.

Download this Research Paper [ PDF 663.2KB | 74 pages ].

Post a Comment

We welcome your feedback on this publication. Post a comment. ADBI is not obliged to acknowledge or publish comments and may abridge or edit them before web posting.

Comment(s)

There are [0] comment(s) for this entry. Post a comment.