Role of Inter-bank Networks in the Pre-war Japanese Financial System
Tetsuji Okazaki and
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Tetsuji Okazaki: Faculty of Economics, University of Tokyo
No CARF-J-021, CARF J-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo
This paper investigates the impact of bank consolidations promoted by government policy, using data from pre-war Japan when the Ministry of Finance promoted bank consolidations by dint of the Bank Law of 1927. It is found that policy-promoted consolidation had a positive effect on deposit growth, especially in the period when the financial system was unstable. On the other hand, it had a negative effect on profitability, particularly when there was no dominant bank among the participants or when more than two banks participated in the consolidation. Policy-promoted consolidation in such cases was likely to be accompanied by large organizational cost.
Pages: 21 pages
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Persistent link: https://EconPapers.repec.org/RePEc:cfi:jseres:cj021
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