Tsuruta, Daisuke (2012): Changing Banking Relationships and Client Firm Performance: Evidence for Japan from the 1990s.
Download (102Kb) | Preview
The banking literature concludes that the performance of client firms deteriorates if their distressed main bank reduces the supply of credit. However, these results rely on the assumption that main banks have an information advantage over other banks, such that if a client firm changes its main bank, its access to credit worsens. Using Japanese data from a period including financial shocks, we show that firms change the main banking relationship when their main bank becomes distressed. In addition, the performance of client firms improves after a change in the main bank relationship. This implies that the availability of credit improves for these firms, despite the change in main bank.
|Item Type:||MPRA Paper|
|Original Title:||Changing Banking Relationships and Client Firm Performance: Evidence for Japan from the 1990s|
|Keywords:||Bank--firm relationships; Bank distress; Private information|
|Subjects:||G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
G - Financial Economics > G2 - Financial Institutions and Services > G20 - General
|Depositing User:||Daisuke Tsuruta|
|Date Deposited:||12. Jan 2012 16:21|
|Last Modified:||16. Feb 2013 02:07|
Detragiache, E., Garella, P., Guiso, L., 2000. Multiple versus single banking relationships: Theory and evidence. Journal of Finance 55 (3), 1133–1161.
Gibson, M. S., 1995. Can bank health affect investment? Evidence from Japan. Journal of Business 68 (3), 281–308.
Hoshi, T., Kashyap, A., Scharfstein, D., 1991. Corporate structure, liquidity, and investment:Evidence from Japanese industrial groups. Quarterly Journal of Economics 106 (1), 33–60.
Kang, J.-K., Stultz, R. M., 2000. Do banking shocks affect borrowing firm performance? An analysis of the Japanese experience. Journal of Business 73, 1–23.
Morck, R., Nakamura, M., Shivdasani, A., 2000. Banks, ownership structure, and firm value in Japan. Journal of Business 73 (4), 539–567.
Ongena, S., Smith, D. C., 2001. The duration of bank relationships. Journal of Financial Economics 61, 449–475.
Rajan, R. G., 1992. Insiders and outsiders: The choice between informed and arm’s-length debt. Journal of Finance 47, 1367–1400.
Sohn, W., 2010. Market response to bank relationships: Evidence from Korean bank reform. Journal of Banking & Finance 34 (9), 2042–2055.
Udell, G. F., 2009.Wall Street, Main Street, and a credit crunch: Thoughts on the current financial crisis. Business Horizons 52 (2), 117–125.
Wu, X., Yao, J., 2012. Understanding the rise and decline of the Japanese main bank system: The changing effects of bank rent extraction. Journal of Banking & Finance 36 (1), 36–50.
Yamori, N., Murakami, A., 1999. Does bank relationship have an economic value?: The effect of main bank failure on client firms. Economics Letters 65 (1), 115–120.