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Partnership To Examine Small Business Bank Relationships

Researchers from the University of Ulster are joining forces with the Federation of Small Businesses to examine the state of relationships between Northern Irish SMEs and their banks.

The University’s Ulster Business School Research Institute and the Institute of Research in Social Sciences (IRiSS) will conduct an online survey of FSB members in Northern Ireland.

The study, which launches in early March, will focus on the various dimensions of their banking relationships.

Professor Mark Durkin, from the Ulster Business School (UBS), himself a former banker, said: “There is no more an important time to examine the state of the SME-bank relationship. The government talks about the need to grow the private sector, but aspiring and established entrepreneurs alike cite barriers to finance and poor relationships with finance providers as key reasons for non-expansion. We wish to examine this pivotal relationship and see in what ways we can help inform policy and practice.”

Welcoming the Ulster Business School initiative, Wilfred Mitchell OBE, FSB Policy Chairman, said: “Understanding the often complicated relationship between small businesses and the banking sector is central to our drive to improve access to credit for our members. The Ulster Business School is keenly aware of the issues facing the sector and, using the information gathered from our members, this study will help provide critical insight into their experiences with the banks and identify key areas and issues that need attention.

“It will also give an invaluable understanding of the factors being faced by many business owners in the current economic environment and we would encourage all our members to play their part in helping to improve conditions between banks and business by completing the survey.

Dr Aodheen O’Donnell, from the University’s Institute of Research in Social Sciences, and part of the research team, said: “The issues around availability of finance can be at least partly attributed to poor communication and information asymmetry between the SME and the bank. Essentially both parties often don’t speak the same language and such communication gaps can lead to relationship breakdown. It will be interesting to examine the extent to which this remains a barrier or whether things have changed.”

Professor Pauric McGowan, Professor of Entrepreneurship at the Ulster Business School, added: “The findings will have wide ranging implications for how banks interact and support small firms here – we need a change of mind-set and we need to see entrepreneurs in both banks and small businesses alike becoming more creative in seeking mutually beneficial models for engagement.”

Findings from the study will be reported back through a public event hosted by the Ulster Business School scheduled for early summer 2012.