Main bank relationships and capital structure in Japan

Atsuo Fukuda, Shinichi Hirota

Research output: Contribution to journalArticle

18 Citations (Scopus)

Abstract

In this paper, we argue that the main bank in Japan acts as a quasi-inside monitor of the firm, delegated by other lenders, and that main bank relationships increase the debt capacity of the firm by reducing the agency cost of debt. On the other hand, firms with high debt ratios will strengthen main bank relationships due to the agency problems associated with high leverage. Thus, the debt ratio and main bank relationships are simultaneously determined and have positive effects on each other. The empirical results we obtain support these hypotheses. J. Japan. Int. Econ. September 1996, 10(3), pp. 250-261. Department of Economics, Kyoto Sangyo University, Kamigamo, Kitaku, Kyoto 603, Japan; and Department of Business Administration and Information, Setsunan University, Ikedanakamachi, Neyagawa, Osaka 572, Japan.

Original languageEnglish
Pages (from-to)250-261
Number of pages12
JournalJournal of the Japanese and International Economies
Volume10
Issue number3
DOIs
Publication statusPublished - 1996 Sep
Externally publishedYes

Fingerprint

indebtedness
bank
Japan
firm
business administration
Bank capital
Capital structure
Bank relationships
Main bank
costs
economics
Debt ratio

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

Cite this

Main bank relationships and capital structure in Japan. / Fukuda, Atsuo; Hirota, Shinichi.

In: Journal of the Japanese and International Economies, Vol. 10, No. 3, 09.1996, p. 250-261.

Research output: Contribution to journalArticle

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