Abstract
Previous research has focused on economic factors that influence relationships between entrepreneurs and banks. Trust is relevant because it can reduce agency problems. A conceptual framework is developed from previous literature and from a study of entrepreneurs and bank managers from two regions of Northeast Italy. Testable propositions are derived regarding determinants of trust and the process of development in the entrepreneur-bank relationship. Within close-knit communities, information from third parties and community involvement affect the build up of trust. The implications are that bestowing trust may increase trustworthy behavior leading to a spiral of trust. Heavy monitoring may lead to lower levels of trust in a bank and lower demand for finance and/or less trustworthy behavior.
| Original language | English |
|---|---|
| Pages (from-to) | 495-517 |
| Number of pages | 23 |
| Journal | Entrepreneurship: Theory and Practice |
| Volume | 30 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - Jul 2006 |