Relationship Banking in Post-Bubble Japan: Coexistence of Soft-and Hard-Budget Constraints 1

Research output: Chapter in Book/Report/Conference proceedingChapter

17 Citations (Scopus)

Abstract

This chapter examines the changes in the Japanese main banking system. Despite the deregulation of bond markets in the mid-1990s, the overall dependence of firms on bank borrowing increased rather than decreased among listed firms during the 1990s. Large firms lessened their ties with banks and began financing through bonds, yet smaller listed firms continued borrowing from banks. In particular, firms with previously high levels of bank debt relied on their main bank for an increasing proportion of those loans. By estimating the employment adjustment function, the chapter shows that the main banks did not effectively discipline corporate restructuring, although banks encouraged the restructuring of firms with a relatively better performance. As Japan recovers from the banking crisis, main bank relationships are likely to survive among a segment of smaller and less internationalized Japanese firms.

Original languageEnglish
Title of host publicationCorporate Governance in Japan: Institutional Change and Organizational Diversity
PublisherOxford University Press
ISBN (Print)9780191713705, 9780199284511
DOIs
Publication statusPublished - 2007 Sep 1
Externally publishedYes

Fingerprint

Relationship banking
Budget constraint
Coexistence
Japan
Bubble
Main bank
Borrowing
Deregulation
Banking crisis
Bank debt
Financing
Corporate restructuring
Large firms
Loans
Bond market
Employment adjustment
Bank relationships
Proportion
Japanese firms
Banking system

Keywords

  • Banking crisis
  • Corporate finance
  • Corporate restructuring
  • Japanese economy
  • Main bank

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

Cite this

Arikawa, Y., & Miyajima, H. (2007). Relationship Banking in Post-Bubble Japan: Coexistence of Soft-and Hard-Budget Constraints 1. In Corporate Governance in Japan: Institutional Change and Organizational Diversity Oxford University Press. https://doi.org/10.1093/acprof:oso/9780199284511.003.0002

Relationship Banking in Post-Bubble Japan : Coexistence of Soft-and Hard-Budget Constraints 1. / Arikawa, Yasuhiro; Miyajima, Hideaki.

Corporate Governance in Japan: Institutional Change and Organizational Diversity. Oxford University Press, 2007.

Research output: Chapter in Book/Report/Conference proceedingChapter

Arikawa, Y & Miyajima, H 2007, Relationship Banking in Post-Bubble Japan: Coexistence of Soft-and Hard-Budget Constraints 1. in Corporate Governance in Japan: Institutional Change and Organizational Diversity. Oxford University Press. https://doi.org/10.1093/acprof:oso/9780199284511.003.0002
Arikawa Y, Miyajima H. Relationship Banking in Post-Bubble Japan: Coexistence of Soft-and Hard-Budget Constraints 1. In Corporate Governance in Japan: Institutional Change and Organizational Diversity. Oxford University Press. 2007 https://doi.org/10.1093/acprof:oso/9780199284511.003.0002
Arikawa, Yasuhiro ; Miyajima, Hideaki. / Relationship Banking in Post-Bubble Japan : Coexistence of Soft-and Hard-Budget Constraints 1. Corporate Governance in Japan: Institutional Change and Organizational Diversity. Oxford University Press, 2007.
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