Borrower-lender relationship and access to commercial banks' credit market

The study examined the extent to which borrower-lender relationships affect the rationing behavior of commercial banks in Ghana. A cross-sectional panel data comprising 14 commercial banks were used for the study. Using the classical linear regression model our results showed that borrowers who have long-term relationships with the banks received more credit at reduced interest rates. It was also observed that years of experience in business, gender, age, sector of business, value of assets, profits and loan maturity period were the significant factors influencing the rationing behavior of the commercial banks. The overall results are quiet revealing, and points to the fact that the long-term borrower-lender relationships lead to some level of trust and confidence between the borrower and the lender that comes with its accrued benefits.