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Have Banks Contributed to Efficient Management in Japan's Manufacturing?

Author

Listed:
  • Masaharu Hanazaki

    (Development Bank of Japan)

  • Akiyoshi Horiuchi

    (Faculty of Economics, University of Tokyo)

Abstract

This paper statistically reexamines the conventional view that the main bank relationship has been an important element of corporate governance in Japan. According to the view, in postwar Japan, the main bank relationship has contributed to efficient management of borrower firms in place of the capital market that disciplines corporate management in the Anglo-American economy. Our analysis finds that neither the main bank relationship nor other capital market factors, which the standard governance theory regards as important determinants of managerial efficiency, consistently influenced efficiency of manufacturing firms' management defined by the total factor productivity (TFP). Instead, market competition, particularly competitive pressures from abroad, is found to have consistently enhanced management efficiency. Thus, the conventional view exaggerates importance of the main bank relationship in the Japanese corporate governance framework.

Suggested Citation

  • Masaharu Hanazaki & Akiyoshi Horiuchi, 2000. "Have Banks Contributed to Efficient Management in Japan's Manufacturing?," CIRJE F-Series CIRJE-F-76, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2000cf76
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2000/2000cf76.pdf
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    References listed on IDEAS

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    Cited by:

    1. Franklin Allen, 2001. "Do Financial Institutions Matter?," Journal of Finance, American Finance Association, vol. 56(4), pages 1165-1175, August.

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