Soft and Hard Information in Bank-firm Relationships: - the Effect of Relationship Intensity and Reporting Conservatism on Loan Pricing and Relationship Value

The thesis develops a conceptual model to explain the interdependencies between soft and hard information in loan contracting. It examines the impact of relationship intensity and reporting conservatism underlying the corporate loan pricing of banks and determining economic value in bank-firm relationships. The author analyses a unique data set by means of partial least squares path modeling. The study?s theoretical development of the conceptual framework of SME finance and the managerial implications of the model?s predictive relevance enhance our understanding of the information role of bank-firm relationships and the reporting conservatism of firms.