Relational Banking

Relational Banking

A form of banking in which the length of time the client has known the bank is considered, sometimes strongly, in risk assessment. For example, in relationship banking, a borrower with mediocre creditworthiness but who has been with the bank for 30 years may be likely to receive a loan regardless of his credit history. Relational banking has played a role in the economic development of some countries. For example, banks tend to finance favored firms, which contributes to their long-term success.