Relationship Banking: an Asset for Financing Small and Medium-Sized French Companies in Periods of Crisis

Business loans are an essential source of financing for small and medium-sized companies and very small businesses in France, and constitute the bulk of their resources. During the recent crises (subprime crisis, sovereign debt crisis, health crisis, invasion of Ukraine), apart from the exceptional measures that were put in place, business loans proved to be robust. They therefore constitute a major asset for the resilience of the French economy. This article highlights a particular feature of the financing of small and medium-sized enterprises in France, namely the importance of relationship lending, which is characterized by a small number of banking relationships per company and the exclusive sharing of information. While it is likely to increase financing costs in periods of expansion, it can significantly reduce them in times of crisis. The expected benefits could be enhanced by the development of more competitive conditions.