Lending Competition and Relationship Banking: Evidence from Japanese Prefectural Level Data

Ogura, Yoshiaki and Yamori, Nobuyoshi (2009): Lending Competition and Relationship Banking: Evidence from Japanese Prefectural Level Data.

Abstract

The question of whether more competition among banks increases relationship banking, which is predicted to improve credit availability for informationally opaque firms in theory, is a controversial issue in the banking literature. By using firm-level survey data in Japan, this paper provides evidence for the negative correlation between lending competition and the provision of relationship banking . This paper raises the question whether fierce interbank competition is always beneficial for small firms.

• Item Type: MPRA Paper
• Language: English
• Keywords: relationship banking, lending competition
• Subjects: L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of Firms; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

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