What drives small and medium enterprises to establish and terminate banking relationships?

Purpose This paper investigates the factors crucial for small and medium enterprises (SMEs) in establishing business relationships with banks Pakistan. Design/methodology/approach To investigate how SMEs select banking using criteria, such as decision factors, decision-makers, processes, a comprehensive literature review was used to classify SMEs' bank selection. A survey questionnaire distributed 200 SMEs, randomly selected from Small Medium Enterprise Development Authority database Probit/Tobit model is estimated explain behavior of SMEs. Findings The results reveal that consider bank's Reputation, Price, Location essential while relationships. tend terminate when Price are considered relationship banks. necessary reduce also if they get attractive offers, or recommended make relationship. study provides intuitions policymakers design policies retain SME customers attract new Practical implications research emphasizes importance competitive transparent pricing strategies designing products Banks must prioritize their Reputation credibility Originality/value attempts provide evidence on SME-Bank focusing decide Also, most related focuses developed countries; this adds behavior, particularly developing country's context.