The Role of Relational Trust in Bank–Small Firm Relationships

Abstract

Using data on 935 small firms and bank managers, we differentiated customers' relational trust in their banks from beliefs about the banks' self-interested motivations. Relational trust mediated the relationship between bank strategies (customer orientation and manager continuity) and the likelihood a firm would switch banks, and the effect of trust went beyond that of beliefs about self-interest. Further, customer orientation reduced bank switching through relational trust, whereas manager continuity operated on switching both directly and through relational trust.