Bank size and lending relationships in Japan

Hirofumi Uchida, Gregory Udell () and Wako Watanabe ()

Journal of the Japanese and International Economies, 2008, vol. 22, issue 2, 242-267

Abstract: Current theoretical and empirical research suggests that small banks have a comparative advantage in processing soft information and delivering relationship lending. The most comprehensive analysis of this view found using US data that smaller SMEs borrow from smaller banks and smaller banks have stronger relationships with their borrowers [Berger, A.N., Miller, N.H., Petersen, M.A., Rajan, R.G., Stein, J.C., 2005. Does function follow organizational form? Evidence from the lending practices of large and small banks. J. Finan. Econ. 76, 237-269]. We employ essentially the same methodology as Berger et al. on a unique Japanese data set and find results that are quite interesting from an international comparison point of view. We find, like Berger et al. in the US, that larger firms tend to borrow from larger banks, and that smaller banks have stronger relationships with their borrowers. However, additionally we find that the former result is not due to larger firms being more transparent in terms of their financial statements. These results imply that although small banks' comparative advantage in relationship lending is likely to be universal, large banks may not necessarily have a comparative advantage in extending transactions-based lending. J. Japanese Int. Economies 22 (2) (2008) 242-267.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (86)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0889-1583(08)00004-X
Full text for ScienceDirect subscribers only

Related works:
Chapter: Bank Size and Lending Relationships in Japan (2008)
Working Paper: Bank Size and Lending Relationships in Japan (2007)
Working Paper: Bank Size and Lending Relationships in Japan (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:22:y:2008:i:2:p:242-267

Access Statistics for this article

Journal of the Japanese and International Economies is currently edited by Takeo Hoshi

More articles in Journal of the Japanese and International Economies from Elsevier
Bibliographic data for series maintained by Catherine Liu ().