Capital injection, restructuring targets and personnel management: The case of Japanese regional banks

Kazuki Onji, David Vera and Jenny Corbett ()

Journal of the Japanese and International Economies, 2012, vol. 26, issue 4, 495-517

Abstract: A case study of the Japanese bank recapitalization by Hoshi and Kashyap (2005) identified a bank that overstated the progress of required personnel downsizing by shifting employees to subsidiaries. This paper asks if the recapitalization program had a design flaw. We focus on regional banks with a unique panel dataset of 81 banking groups that allows us to observe the employment levels of subsidiaries, in addition to those of parent banks, over fiscal 1994–2006. We estimate a labor-demand equation with sluggish adjustment to compare the employment patterns of public capital recipients and other banks. The result indicates that the shuffling of personnel to subsidiaries was a common response among banks that received large capital injections. Our finding highlights a tension between a reconstruction program and labor law when a country has a tight law on dismissal.

Keywords: Recapitalization program; Employee downsizing (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (10)

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Working Paper: Capital Injection, Restructuring Targets and Personnel Management: The Case of Japanese Regional Banks (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:26:y:2012:i:4:p:495-517

DOI: 10.1016/j.jjie.2012.08.002

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