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

Masaharu Hanazaki, 正晴 花崎, マサハル ハナザキ, Akiyoshi Horiuchi, 昭義 堀内 and アキヨシ ホリウチ

No 2003-22, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

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.

Pages: 27 pages
Date: 2003-11
Note: May 2000
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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitcei:2003-22

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