What Promotes Japanese Regional Banks to Disclose Credit Ratings Voluntarily?

Kondo, Kazumine (2010): What Promotes Japanese Regional Banks to Disclose Credit Ratings Voluntarily?

Abstract

This paper examines what types of Japanese regional banks are more likely to obtain credit ratings at the present time when disclosures by financial institutions are becoming more and more important. We found that banks in more competitive markets, those that have larger assets, and those whose bad ratio is lower are more likely to disclose credit ratings. It was also revealed that regional banks in the same region (prefecture) as other banks that go bankrupt often feel it necessary to actively demonstrate their own solidness in the market by obtaining foreign credit ratings. We also analyzed whether regional banks that disclose more credit ratings succeed in obtaining financing from depositors. Our results indicate that regional banks that obtain more credit ratings, in particular foreign ratings, succeed in increasing their bank balances.

• Item Type: MPRA Paper
• Language: English
• Keywords: disclosure, credit ratings, market disciplines, scale of economies, bank balances.
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services; G - Financial Economics > G2 - Financial Institutions and Services > G20 - General

References

Ashbaugh-Skaife, H., D. W Collins and R. LaFond (2006) “The Effects of Corporate Governance on Firms’ Credit Ratings,” Journal of Accounting and Economics, Vol. 42, pp. 203-243.

Cantor, R. and F. Packer (1994) “The Credit Rating Industry,” Federal Reserve Bank of New York Quarterly Review, Vol. 19, pp. 1-26.

Cantor, R. and F. Packer (1997) “Differences of Opinion and Selection Bias in the Credit Rating Industry,” Journal of Banking and Finance, Vol. 21, pp. 1395-1417.

Cargill, T. F. and N. Yoshino (2003) Postal Savings and Fiscal Investment in Japan, Oxford University Press.

Hsueh, L. P. and D. S. Kidwell (1988) “Bond Ratings: Are Two Better Than One?,” Financial Management, Vol. 17, No. 1, pp. 46-53.

Kondo, K. (2008) “What Types of Credit Association Are More Likely to Seek Credit Ratings?” Journal of Personal Finance and Economics, Vol. 27, pp. 69-76. (in Japanese)

Moon, C. G. and J. G. Stotsky (1993) “Testing the Differences Between the Determinants of Moody’s and Standard & Poor’s Rating,” Journal of Applied Econometrics, Vol. 8, pp. 51-69.

Poon, W. P. H. (2003) “Are Unsolicited Credit Ratings Biased Downward?” Journal of Banking and Finance, Vol. 27, pp. 593-614.

Pottier, S. W. and D. W. Sommer (1999) “Property-Liability Insurer Financial Strength Ratings: Differences Across Rating Agencies,” Journal of Risk and Insurance, Vol. 66, No. 4, pp. 621-642.

Spiegel, M. and N. Yamori (2006) “Determinants of Voluntary Bank Disclosure: Evidence from Japanese Shinkin Bank,” in M. Hutchison and F. Westermann (eds.) Japan's Great Stagnation: Financial and Monetary Policy Lessons for Advanced Economies (Cesifo Seminar), The MIT Press, pp. 103-127.

Yamori, N. (2004) The Crisis of the Regional Financial System and Finance of Medium- and Small-Sized Business, Chikura Press. (in Japanese)