Did mergers help Japanese mega-banks avoid failure? Analysis of the distance to default of banks

Kimie Harada and Takatoshi Ito ()

Journal of the Japanese and International Economies, 2011, vol. 25, issue 1, 1-22

Abstract: This paper applied the distance to default (DD) measure to five mergers among large Japanese banks during the crisis period. The DD helps us analyze whether mergers that took place in the late 1990s and 2000s made the merged banks financially more robust, as intended. Our findings include: (1) A merged bank fundamentally inherits financial soundness of premerged banks, without incremental value from the merger; and (2) A negative DD was observed following the merger. The findings of this case study are consistent with the view that large Japanese banks' mergers either failed to implement intended scale economies or were motivated by a belief in the too-big-to-fail policy.

Keywords: Distance; to; default; Bank; merger; Financial; holding; company (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0889-1583(10)00042-0
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Did Mergers Help Japanese Mega-Banks Avoid Failure? Analysis of the Distance to Default of Banks (2008)
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:25:y:2011:i:1:p:1-22

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 ().