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Main bank impairment and corporate cash holdings during the global financial crisis

Author

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  • Naiki, Eriko
  • Ogane, Yuta

Abstract

This paper examines how the impairment of main banks’ balance sheets affects corporate cash-holding behavior during the 2008 financial crisis using a firm–bank matched panel dataset of 2,520 firms in Japan. The major findings of this paper are as follows. First, the impairment of main banks increases firms’ cash holdings during this financial crisis. Second, this tendency is more pronounced among firms with limited financing sources and those with unstable main bank relationships. Third, holding large amounts of cash increases the value of firms with main bank impairment during the 2008 financial crisis.

Suggested Citation

  • Naiki, Eriko & Ogane, Yuta, 2024. "Main bank impairment and corporate cash holdings during the global financial crisis," Journal of Corporate Finance, Elsevier, vol. 86(C).
    • Handle: RePEc:eee:corfin:v:86:y:2024:i:c:s0929119924000270
    DOI: 10.1016/j.jcorpfin.2024.102565
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    More about this item

    Keywords

    Cash holdings; Bank impairment; Financial crisis; Main bank; Firm–bank relationships;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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