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The transaction-relationship paradox Effects of bank operational capabilities on bank performance throughout a shift from relationship lending to transaction
Stockholm University, Faculty of Social Sciences, Stockholm Business School.
Number of Authors: 32019 (English)In: Managerial Finance, ISSN 0307-4358, E-ISSN 1758-7743, Vol. 45, no 9, p. 1253-1271Article in journal (Refereed) Published
Abstract [en]

Purpose The purpose of this paper is to apply a capability perspective to investigate the shift from relationship lending to transaction lending in a bank's corporate segment. The authors investigate the impact of three operational capabilities: assisting corporate clients in funding and business operations, management of customer relationships and internal cooperation on performance in relationship and transaction lending. Design/methodology/approach The primarily empirical material comprises longitudinal survey data, collected on three occasions during the period 1998 throughout 2001 from one of Sweden's largest banks. Data are analyzed using factor analysis and OLS regression. Findings Results show that the effects of the three capabilities are contingent on the type of lending strategy: In relationship lending, assisting corporate clients has no significant direct effect on performance; however, it has an indirect effect on performance via the management of customer relationships. In transaction lending, assisting corporate clients has a direct effect on performance, and this effect becomes stronger as the transaction strategy is further implemented. The results also show that the direct effect of the management of customer relationships and cooperation on performance is significant in both strategies; however, the relation is stronger in relationship lending compared with transaction lending. Originality/value The findings indicate that the choice of lending strategy is more complex than a choice between a strict relationship strategy and a strict transaction strategy and that a strategy that leads to competitive advantage includes elements of both strategies.

Place, publisher, year, edition, pages
2019. Vol. 45, no 9, p. 1253-1271
Keywords [en]
Bank, Operational capabilities, Relationship lending, Transaction lending
National Category
Business Administration
Identifiers
URN: urn:nbn:se:su:diva-174865DOI: 10.1108/MF-01-2019-0024ISI: 000485293200006OAI: oai:DiVA.org:su-174865DiVA, id: diva2:1360787
Available from: 2019-10-14 Created: 2019-10-14 Last updated: 2019-10-14Bibliographically approved

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