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Relationship Banking and Debt Choice: evidence from Japan

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  • Yasuhiro Arikawa
  • Hideaki Miyajima

Abstract

The purpose of this paper is to test hypotheses regarding the mix of bank borrowing and bonds that occur under relationship banking, thereby constructing a detailed data set on the debt structure of large Japanese firms from the late 1980s to the 1990s. We show that debt choice is affected by main bank relationships, in the sense that successful firms with strong bank ties are much more likely to issue public bonds than resort to bank borrowing.

Suggested Citation

  • Yasuhiro Arikawa & Hideaki Miyajima, 2005. "Relationship Banking and Debt Choice: evidence from Japan," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(3), pages 408-418, May.
    • Handle: RePEc:bla:corgov:v:13:y:2005:i:3:p:408-418
    DOI: 10.1111/j.1467-8683.2005.00435.x
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    References listed on IDEAS

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    1. Joe Peek & Eric S. Rosengren, 2005. "Unnatural Selection: Perverse Incentives and the Misallocation of Credit in Japan," American Economic Review, American Economic Association, vol. 95(4), pages 1144-1166, September.
    2. Takeo Hoshi & Anil Kashyap & David Scharfstein, 1993. "The Choice Between Public and Private Debt: An Analysis of Post-Deregulation Corporate Financing in Japan," NBER Working Papers 4421, National Bureau of Economic Research, Inc.
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    Cited by:

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    2. Ushijima, Tatsuo, 2008. "Domestic bank health and foreign direct investment," Journal of the Japanese and International Economies, Elsevier, vol. 22(3), pages 291-309, September.
    3. Jean McGuire & Sandra Dow, 2009. "Japanese keiretsu: Past, present, future," Asia Pacific Journal of Management, Springer, vol. 26(2), pages 333-351, June.
    4. Chizema, Amon, 2010. "Early and late adoption of American-style executive pay in Germany: Governance and institutions," Journal of World Business, Elsevier, vol. 45(1), pages 9-18, January.
    5. Nagano, Mamoru, 2018. "What promotes/prevents firm bond issuance in emerging economies: Bank–firm relationship or information asymmetry?," International Review of Economics & Finance, Elsevier, vol. 56(C), pages 161-177.
    6. Raff, Horst & Ryan, Michael & Stähler, Frank, 2015. "Financial frictions and foreign direct investment: Theory and evidence from Japanese microdata," Kiel Working Papers 1992, Kiel Institute for the World Economy (IfW Kiel).
    7. Sandra Dow & Jean McGuire & Toru Yoshikawa, 2011. "Disaggregating the group effect: Vertical and horizontal keiretsu in changing economic times," Asia Pacific Journal of Management, Springer, vol. 28(2), pages 299-323, June.
    8. W. R. Garside, 2012. "Japan’s Great Stagnation," Books, Edward Elgar Publishing, number 14624.
    9. Zinan Hu & Ruicheng Yang & Sumuya Borjigin, 2024. "A multistage forecasting model for green bond cost optimization with dynamic corporate risk constraints," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 43(7), pages 2607-2634, November.
    10. Gregory JACKSON & MIYAJIMA Hideaki, 2007. "Varieties of Capitalism, Varieties of Markets: Mergers and Acquisitions in Japan, Germany, France, the UK and USA," Discussion papers 07054, Research Institute of Economy, Trade and Industry (RIETI).
    11. James, Barclay E. & McGuire, Jean B., 2016. "Transactional-institutional fit: Corporate governance of R&D investment in different institutional contexts," Journal of Business Research, Elsevier, vol. 69(9), pages 3478-3486.
    12. Han, Seung Hun & Pagano, Michael S. & Shin, Yoon S., 2019. "The evolving nature of Japanese corporate governance: Guaranteed bonds vs. rated bonds," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 58(C), pages 162-183.

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