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

Masaharu Hanazaki and Akiyoshi Horiuchi
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Masaharu Hanazaki: Development Bank of Japan
Akiyoshi Horiuchi: Faculty of Economics, University of Tokyo

No CIRJE-F-76, CIRJE F-Series from CIRJE, 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.

Pages: 27 pages
Date: 2000-06
New Economics Papers: this item is included in nep-cfn
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2000cf76

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