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Cross-Prefecture Expansion of Regional Banks in Japan and Its Effects on Lending-Based Income

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  • Kondo, Kazumine

Abstract

This paper examines whether Japanese regional banks entering the banking market in other prefectures, including neighboring prefectures, can increase their lending-based income. To stimulate local economies and support local small- and medium-sized enterprises (SMEs), the current Japanese government’s policies for regional banks require these banks to engage in region-based relationship banking practices. In this study, three lending-based income measures were used as dependent variables, and estimation was made using panel data from Japanese regional banks. As a result, it was determined that regional banks that enter markets in other prefectures experience positive effects in all three lending-based income measures. Moreover, it was determined that regional banks whose headquarters are located in non-urban areas derive greater benefit from their loan businesses upon entry into other prefectures, including neighboring prefectures, where economic activity is more vibrant than regional banks whose headquarters are located in urban areas.

Suggested Citation

  • Kondo, Kazumine, 2014. "Cross-Prefecture Expansion of Regional Banks in Japan and Its Effects on Lending-Based Income," MPRA Paper 52978, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:52978
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    More about this item

    Keywords

    regional banks; non-urban regional banks; region-based relationship banking; entries into other prefectures; lending-based income;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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