Japanese Banks' Monitoring Activities and the Performance of Borrower Firms: 1981-1996

Kyoji Fukao, Kiyohiko G. Nishimura, Qing-Yuan Sui and Masayo Tomiyama
Authors registered in the RePEc Author Service: Masayo Shikimi

Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: Using micro data of Japanese banks and borrower firms, we construct an index measure that quantitatively describes the monitoring activities of Japanese banks. We examine the effects of bank monitoring on the profitability of borrower firms. We find significant positive effects in the periods 1986-1991 and 1992-1996, although there is no significant effect in the 1981-1985 period . We also examine how banks' monitoring affects borrowers. The results show that the positive effects of banks' monitoring on borrowers' profitability are mostly caused by screening effects, not performance-improving effects.

Date: 2004-10
New Economics Papers: this item is included in nep-sea
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Journal Article: Japanese Banks’ monitoring activities and the performance of borrower firms: 1981–1996 (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hst:hstdps:d04-42

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