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Does Bank Liquidation Affect Client Firm Performance? Evidence from a Main Bank Failure in Japan

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  • HORI Masahiro

Abstract

Several empirical studies have supported the hypothesis that bank relationships have economic value. By examining the effect of a Japanese bank failure on the profitability of client firms, this paper shows that the impact of a bank failure on clients depends on clients depends on the client's characteristics and the method of bank liquidation, and that the value of bank relationships has been overstated in the previous studies.

Suggested Citation

  • HORI Masahiro, 2004. "Does Bank Liquidation Affect Client Firm Performance? Evidence from a Main Bank Failure in Japan," ESRI Discussion paper series 102, Economic and Social Research Institute (ESRI).
    • Handle: RePEc:esj:esridp:102
    as

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    File URL: http://www.esri.go.jp/jp/archive/e_dis/e_dis110/e_dis102a.pdf
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    References listed on IDEAS

    as
    1. Brewer, Elijah III & Genay, Hesna & Hunter, William Curt & Kaufman, George G., 2003. "The value of banking relationships during a financial crisis: Evidence from failures of Japanese banks," Journal of the Japanese and International Economies, Elsevier, vol. 17(3), pages 233-262, September.
    2. HORI Masahiro & TAKAHASHI Tomoyuki, 2001. "The Value of Bank Relationship: A Study on the Hokkaido Takusyoku Bank's Failure," ESRI Discussion paper series 004, Economic and Social Research Institute (ESRI).
    3. Ongena, Steven & Smith, David C. & Michalsen, Dag, 2003. "Firms and their distressed banks: lessons from the Norwegian banking crisis," Journal of Financial Economics, Elsevier, vol. 67(1), pages 81-112, January.
    4. Yamori, Nobuyoshi & Murakami, Akinobu, 1999. "Does bank relationship have an economic value?: The effect of main bank failure on client firms," Economics Letters, Elsevier, vol. 65(1), pages 115-120, October.
    5. Masahiro Hori, 2003. "The Value of Bank Relationship - A Study on the Hokkaido Takusyoku Bank's Failure- (in Japanese)," Economic Analysis, Economic and Social Research Institute (ESRI), vol. 169, pages 24-49, March.
    6. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
    7. Slovin, Myron B & Sushka, Marie E & Polonchek, John A, 1993. "The Value of Bank Durability: Borrowers as Bank Stakeholders," Journal of Finance, American Finance Association, vol. 48(1), pages 247-266, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    bank relationship; bank failure; private information; event study JEL classification: G21; G14;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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