Correspondence: Lars Silver, Centre for Banking and Finance, The Royal Institute of Technology, Drottning Kristinas väg 30, Stockholm SE – 100 44, Sweden. E-mail: lars.silver@infra.kth.se

¹is a PhD at the Centre for Banking and Finance at the Royal Institute of Technology. His main research interest is the organization of the modern bank.

²is a PhD in Business Studies at the Centre for Banking and Finance at the Royal Institute of Technology. His main research interest is in entrepreneurship and the financing of SMEs.

Received 20 February 2009; Revised 20 February 2009; Published online 11 September 2009.

Abstract

The purpose of the paper is to analyze how different dimensions of the relationship between banks and small to medium-sized enterprises (SME) influence the SMEs' loyalty towards the banks. A survey was administered to 1024 CEOs of Swedish SMEs. In the questionnaire, a number of aspects of the relationship with the bank were examined, especially how banks contribute to the development of the SMEs, and how this affects the SMEs' loyalty. This paper posits The Close Relationship Strategy, which implies that by being more active in the relationship, banks could create more satisfied and loyal SME customers. The study has relevance for banks that are trying to develop their corporate brands through a closer relationship with SMEs. The paper provides a framework for understanding how banks can achieve customer loyalty and develop their brands by focusing on important aspects of the relationship with their SME customers. This study provides important insights into SMEs' perceptions of their banks' capacity to deliver meaningful advice, and how a positive relationship can create more loyal customers.