long-term customer relationships reduce the cost of information collection and make it easier to screen out credit risks
Credit risk:
The possibility of suffering a loss as a result of a borrower's failure to make loan payments or keep a contractual obligation is known as credit risk.
Usually, it alludes to the potential that the lender won't receive the principal and interest that is due, which would disrupt cash flows and increase collection costs. In order to offer extra protection against credit risk, excess cash flows could be written. When there is credit risk for a lender, it can be reduced by using a higher coupon rate, which produces larger cash flows.
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