Relationships within banks in India: A theoretical perspective

Anura De Zoysa, University of Wollongong
Shyam S. Bhati, University of Wollongong

Article comments

Bhati, S. & De Zoysa, A. (2011). Relationships within banks in India: A theoretical perspective. Banks and Bank Systems, 6 (3), 98-105.

Abstract

Using two theoretical approaches ¿ agency theory and trust theory, this paper analyzes the banking relationship betweenbranch manager and loan officer of a bank branch in India. The analysis is performed across five dimensions ¿ supervisorsubordinate relationship, delegation of authority, assumption of risk in lending, goal congruence and mutual dependence.This analysis provides a theoretical foundation for examining bank relationships in India. The role of culture in this relationshipis also examined as it is an important contributing factor in business relationships in India. Since Trust theory can explainsituations involving multifaceted relationships such as one between branch manager and loan officer using stakeholders¿perspective, this study concludes that the trust theory is a better descriptor of the banking relationship betweenbranch manager and loan officer in Indian banks.