Bank Ties and Firm Performance in Japan: Some Evidence Since FY2002
Bank for International Settlements, Monetary and Economic Department, 2009 - Bank investments - 43 pages
"Since the mid-1990s, major Japanese banks have sold off a significant portion of their holdings of corporate equity. Using information on the identity of Japanese firms' top 10 shareholders, this paper explores the process of banks' equity disposal. There is some evidence that, after FY2001, banks' sales of equity accelerated, even holdings in firms for which the bank served as the main bank. However, affiliation with a main bank - proxied by firm-bank loan and shareholding ties - continues to be negatively associated with firm performance through FY2004. Regression estimates suggest that firms with strong bank ties are less profitable, face higher interest payments, and yet do not seem to enjoy lower stock price volatility than other firms. These effects are strongest for firms with a history of outside financing options, consistent with earlier arguments that the benefits of main bank relationships accrue to the banks themselves."--Author's abstract
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bank afﬁliation bank dependent Bank of Japan bank’s banking groups beneﬁts beta client ﬁrms coefﬁcient convertible bonds corporate equity dispose of shares dummy variable Elig All lnelig Eligible ﬁrms equity disposal equity holdings equity portfolios equity prices estimated EXRET ﬁgures ﬁnancial Financial Economics ﬁnancing options ﬁrm performance ﬁrm-bank relationship ﬁrm’s main bank ﬁrst four mega-banks Frank Packer Graph group of ﬁrms identiﬁed individual banks interest coverage ratio Kaigin database Keiretsu largest lender largest shareholder lending lnelig Elig main bank relationships major banks major Japanese banks merger Miyajima Mizuho Morck non-bond debt number of ﬁrms number of shares ownership particular ﬁrm period t-1 proﬁtability regressors Resona Resona Bank RSL_GR sample of ﬁrms SDUM shareholding data shares held signiﬁcant signiﬁcantly speciﬁc variables stock price volatility Sumitomo Mitsui Table TDEBT_MC Tokyo Mitsubishi UFJ top 10 shareholders top bank top ﬁve top ten shareholders TOP_LNTL total assets total liabilities total loans trust banks