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Interbank networks in prewar Japan: structure and implications

Tetsuji Okazaki and Michiru Sawada

Industrial and Corporate Change, 2012, vol. 21, issue 2, 463-506

Abstract: In this article, we explore the structure and implications of interbank networks in prewar Japan, focusing on director interlocking. We find that approximately half the banks had at least one connection with another bank through director interlocking, and that a bank that had connections with other banks was less likely to fail than a bank without a network. The quality of networks also matters in the sense that the failure probability of a bank with a network was negatively associated with the profitability of the connected banks. On the other hand, there is no strong evidence of financial contagion through networks. In addition, networks of director interlocking contributed to the stabilization of the financial system through coordinating bank mergers. Copyright 2012 The Author 2011. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Date: 2012
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Related works:
Working Paper: Interbank Networks in Prewar Japan: Structure and Implications (2011) Downloads
Working Paper: Interbank Networks in Prewar Japan: Structure and Implications (2011) Downloads
Working Paper: Interbank Networks in Pre-war Japan:Structure and Implications (2008) Downloads
Working Paper: Interbank Networks in Pre-war Japan: Structure and Implications (2008)
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