CIRJE-F-239 | "Does Relationship Banking Matter? Japanese Bank-Borrower Ties in Good Times and Bad" |
Author Name | Miwa, Yoshiro and J. Mark Ramseyer |
Date | August 2003 |
Full Paper | PDF file@ |
Remarks | @Subsequently published as "Does Relationship Banking Matter? The Myth of the Japanese Main Bank", Journal of Empirical Legal Studies, 2005, 2, July, 261-305 |
Abstract |
The Japanese "main bank system" figures prominently in the recent literature on "relationship banking." By most accounts, the main bank epitomizes relationship finance: traditionally, every large Japanese firm had one, and that bank monitored the firm, participated in its governance, acted as the delegated monitor for other creditors, and rescued the firm if it fell into financial distress. Yet all this has begun to change, continue these accounts. Japan deregulated its financial markets in the 1980s, and many firms abandoned their relational lender for market finance. As the main banks then lost their ability to the constrain firms -- as relationship banking unraveled -- the firms gambled in the stock and real estate bubbles, the bubbles burst, and the firms threw the country into recession. |