How banks construct and manage risk. A sociological study of small firm lending in Britain and Germany

This paper analyses the role of banks in financing SMEs in Britain and Germany. It applies a sociological institutionalist approach to understand how banks construct and manage risk, relating to SME business. The empirical analysis is based on the results of a comparative survey of a sample of British and German banks and also refers to statistical material produced by the banks themselves. The paper concludes that, even though bank-firm relations are still deeply embedded in national institutional frameworks, some tendencies towards convergence can also be observed, particularly among commercial banks from the two countries. These flow from both internationalisation and from the political influence of the EU.