Bank monitoring and investment : evidence from the changing structure of Japanese corporate banking relationships

Author / Creator

Hoshi, Takeo

Available as

Online

Summary

Abstract: During this decade the structure of corporate finance in Japan has. Abstract: changed dramatically. Japanese firms that once used bank debt as their prime. Abstract: source of financing n...

Abstract: During this decade the structure of corporate finance in Japan has.

Abstract: changed dramatically. Japanese firms that once used bank debt as their prime.

Abstract: source of financing now rely more heavily on the public capital markets. This.

Abstract: trend was facilitated by the substantial deregulation of the Japanese capital.

Abstract: markets. In an earlier paper (Moshi, Kashyap, and Scharfstein 1988). we.

Abstract: demonstrated that investment by firms with close bank relationships appears to.

Abstract: be less liquidity constrained than investment by firms without close bank.

Abstract: ties. We interpreted this finding as evidence that bank ties tend to mitigate.

Abstract: information problems in the capital market. This paper tracks the investment.

Abstract: behavior of firms that have recently weakened their bank ties in favor of.

Abstract: greater reliance on the bond market. The results suggest that these firms are.

Abstract: now more liquidity constrained. The paper concludes with a discussion of why.

Abstract: firms would loosen their bank ties in light of these liquidity costs.

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