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Interbank Networks in Prewar Japan: Structure and Implications

Tetsuji Okazaki and Michiru Sawada
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Tetsuji Okazaki: Faculty of Economics, University of Tokyo

No CARF-F-250, CARF F-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo

Abstract: In this paper, 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.

Pages: 61 pages
Date: 2011-07
New Economics Papers: this item is included in nep-his and nep-net
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https://www.carf.e.u-tokyo.ac.jp/old/pdf/workingpaper/fseries/260.pdf (application/pdf)

Related works:
Journal Article: Interbank networks in prewar Japan: structure and implications (2012) 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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