This paper examines the value of banking relationships by assessing its influence on lending behavior. The loan data from the end of 1992 to 1998 of 38 banks and 176 publicly-held companies in Taiwan were collected for empirical analysis. The major findings reveal that banks are able to reduce the information and monitoring costs by keeping strong relationships with their borrowers, and the lower costs are reflected in their loan pricing. Specifically, for paired and successive loan contracts, the loan rates of the subsequent periods are lower than those of the prior periods. We also find that the primary banks offer lower rates for their borrowers than non-primary banks. Further, a primary bank with long-term commitment would provide liquidity insurance to its borrowers. When borrowers' credit ratings are downgraded, they could obtain funds by increasing the credit lines more from their primary banks than from non-primary banks, although the effects might be influenced by the factors of government intervention, government-controlled banks and group-affiliated banks.