Disciplinary Pressure is More Necessary for Cooperative Banks Than Stock Banks: Results from Bank Efficiencies Estimation

Kozo Harimaya, Kei Tomimura and Nobuyoshi Yamori
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Kei Tomimura: Faculty of Business Administration, Aichi University

No DP2015-05, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: How to discipline managers of cooperative structured financial institutions (co-ops) is considered to be a critical issue by the Japanese financial regulatory authorities, because co-ops play a significant role in the domestic banking market, especially for small and medium-sized enterprises. This paper seeks to clarify whether the effect of the governance-related variables on firm performance varies across stock and cooperative banks in Japan. The results in this paper confirmed that the presence of outside directors has a significant effect on efficiency measures for cooperative banks. In contrast, such variables have no significant effect for stock banks. These results suggest that outsider directors’ discipline is more necessary for cooperative banks than stock banks, which are under strong pressure from shareholders.

Keywords: Corporate governance; Efficiency; Outside directors; Cooperative bank; Regional bank (search for similar items in EconPapers)
JEL-codes: G21 G29 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2015-02, Revised 2016-05
New Economics Papers: this item is included in nep-eff
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https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2015-05.pdf Revised version, 2016 (application/pdf)

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