Abstract
This article analyzes the validity of relationship banking through agent-based modeling. In the analysis, we especially focus on the relationship between economic conditions and both lenders' and borrowers' behaviors. As a result of intensive experiments, we made the following interesting findings: (1) Relationship banking contributes to reducing bad loan; (2) relationship banking is more effective in enhancing the market growth compared to transaction banking, when borrowers' sales scale is large; (3) keener competition among lenders may bring inefficiency to the market.
