How does banking industry consolidation affect bankfirm relationships? Evidence from a large Japanese bank merger Academic Article uri icon

abstract

  • We employ standard event study methodology to examine how bank consolidation affected bank-firm relationships in Japan. We also investigate the source of relationship benefits to client firms. Our analyses focus on the case of Mizuho Holdings, which became the largest bank in the world upon the merger of three large Japanese banks on August 19, 1999. Our findings indicate that firms using one of the three banks as their main bank or for large credit exposures did not experience the significant negative stock price reactions of nonmain bank or lower credit exposure firms. Multiple regression analyses reveal that, holding constant a number of firm-level characteristics, main bank status was the most important determinant of bank-firm relationships in Japan. Further tests suggest a lesser though significant role for the size of loans from the main bank. 2003 Elsevier B.V. All rights reserved.

published proceedings

  • Pacific-Basin Finance Journal

author list (cited authors)

  • Shin, G. H., Fraser, D. R., & Kolari, J. W.

citation count

  • 6

complete list of authors

  • Shin, G Hwan||Fraser, Donald R||Kolari, James W

publication date

  • July 2003