Mutual trust as a booster of credit and investment activities of banks and development of small industrial firms

Abstract

The article proves the importance of boosting the level of trust in the interaction between small industrial businesses and banks. The problems in the relations between these economic entities in Russia have been identified and the ways of solving them by moving to a partnership-based model of cooperation of banks with small enterprises have been outlined. The defined model of cooperation is based on the adaptive credit and investment consulting (ACIC) method proposed by the authors. This method assumes mutual trust between the economic agents that appears while ensuring complete transparency of information among the participants of credit transaction. It also assumes their interest in long-term and sustainable relations and adaptation of the services provided by the bank to the certain economic condition of a small firm. It is shown that the implementation of ACIC in the practice of bank's lending to small enterprises will ensure an increase in the level of mutual trust between them and boost their credit and investment activities. The work reviews and classifies methods for quantifying the level of trust between various economic entities; a synthetic index that measures the level of trust between banks and small industrial enterprises is developed; and a methodology for an approximate estimation of the economic effect of the ACIC application is proposed. The results of the study can be adapted for the conditions of other countries with similar problems in the interaction between banks and small firms.