Sales-Maximization vs. Profit-Maximization: Managerial Behavior at Japanese Regional Banks 1980-2009

Kozo Harimaya, Takao Ohkawa, Makoto Okamura and Tetsuya Shinkai ()
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Makoto Okamura: Faculty of Economics, Ritsumeikan University

No 94, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: In this paper, we analyze the managerial behavior of firms by estimating a nested objective function consistent with the framework of Fershtman and Judd (1987). Using data for Japanese regional banks for FY 1980-FY 2009, we focus on oligopolistic behavior in the domestic loan market and examine the intensity with which managers attempt to maximize sales and profits. We find that sales-maximization explains the behavior of Japanese regional banks more adequately and appropriately than profit-maximization. In particular, yearly fluctuations of the degree of managerial objectives suggest that the effort to maximize sales has intensified after full-scale liberalization of interest rates.

Keywords: firm objective; strategic delegation; managerial incentives; financial liberalization and banking (search for similar items in EconPapers)
JEL-codes: G21 L13 L21 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2012-09, Revised 2012-09
New Economics Papers: this item is included in nep-ban, nep-eff, nep-hme and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:94

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