TY - JOUR
T1 - Dark-side evidence on bank-firm relationship in Japan
AU - Yao, Jun
AU - Ouyang, Hongbing
PY - 2007/3
Y1 - 2007/3
N2 - Kang and Stulz [Kang, J.K., Stulz, R.M., 2000. Do banking shocks affect borrowing firm performance? An analysis of the Japanese experience. Journal of Business 73, 1-23] find that firms which are more dependent on banks perform especially poorly during the early 1990s when Japan suffered a great economic shock. Examining the same period, this study provides further evidence on the dark side of a close bank-firm relationship. The results reveal that main banks try to stabilize their earnings by asking their closely controlled clients to over-borrow and over-invest. More specifically, we find a higher main bank power (MBP) is associated with higher loan ratio, higher interest payments, higher investment expenditure but worse firm performance.
AB - Kang and Stulz [Kang, J.K., Stulz, R.M., 2000. Do banking shocks affect borrowing firm performance? An analysis of the Japanese experience. Journal of Business 73, 1-23] find that firms which are more dependent on banks perform especially poorly during the early 1990s when Japan suffered a great economic shock. Examining the same period, this study provides further evidence on the dark side of a close bank-firm relationship. The results reveal that main banks try to stabilize their earnings by asking their closely controlled clients to over-borrow and over-invest. More specifically, we find a higher main bank power (MBP) is associated with higher loan ratio, higher interest payments, higher investment expenditure but worse firm performance.
KW - Bank loan
KW - Bank-firm relationship
KW - Banking
KW - Main bank
KW - Ownership structure
UR - http://www.scopus.com/inward/record.url?scp=33847079208&partnerID=8YFLogxK
UR - https://www.scopus.com/record/pubmetrics.uri?eid=2-s2.0-33847079208&origin=recordpage
U2 - 10.1016/j.japwor.2005.10.001
DO - 10.1016/j.japwor.2005.10.001
M3 - RGC 21 - Publication in refereed journal
SN - 0922-1425
VL - 19
SP - 198
EP - 213
JO - Japan and the World Economy
JF - Japan and the World Economy
IS - 2
ER -