The impact of relationship lending to the cost of debt and firm performance of manufacturing companies in the Philippines from the years 2009-2013

• Main Authors: Cruz, Anna Theresa, Hsinh, Philip, Malihan, Sandra
• Format: text
• Language: English
• Published: Animo Repository 2015
• Subjects: Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18069
• Institution: De La Salle University

Through the years, there have been numerous journals published on the impact of relationship lending to European Small and Medium Enterprises (SMEs), particularly those enterprises in Spain. In these papers, they found that relationship lending affects a firm's cost of dbt, credit rationing, and firm performance. This study explained how relationship lending affects manufacturing companies in the Philippines. In quantifying the independent variable, ind this case, relationship lending, the researchers used the number of banks a firm deals with and the duration or the length of relationship between the two parties. The researchers used the firms' cost of debt and firm performance as dependent variables. Interest expense is used as a measure of Cost of Debt, while Return on Equity and Income are used as measures of firm performance. The researchers found that there is a positive relationship between the number of banks a firm deals with and the firms' interest expense. The same is true for Firm Debt and Income.