A Study of the Key Drivers and Challenges in the Customer Relationship Between SMEs and Their Banks in Malaysia

摘要

This paper investigates the key drivers and challenges in the customer relationship between Small and Medium Enterprises (SMEs) and their banks in Malaysia. The results suggest that the existing relationship between SMEs and their banks can be improved over time and nurtured through trust. This relationship can also be further strengthened through adequate information provided by the SMEs to their banks. Whilst adequate information will overcome the information asymmetric problems, SMEs with multiple banks contacts tend to create competition amongst banks. Competition will cause the banks to focus on the need to have a closer relationship with their customers. The results also suggest that the type of industry that SMEs belonged to does not influence their relationship with banks. The results also evidently reflect that the current efforts of the Malaysia government in promoting the relationship between SME and their banks seem to have room for improvement.