Bank Size and Lending Relationships in Japan

Hirofumi Uchida, Gregory Udell () and Wako Watanabe ()

No 13005, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Current theoretical and empirical research suggests that small banks have a comparative advantage in processing soft information and delivering relationship lending. The most comprehensive analysis of this view found using U.S. data that smaller SMEs borrow from smaller banks and smaller banks have stronger relationships with their borrowers (Berger, Miller, Petersen, Rajan, and Stein 2005) (BMPRS). We employ essentially the same methodology as BMPRS on a unique Japanese data set and obtained findings that are quite interesting from an international comparison point of view. We found like BMPRS that larger firms tend to borrow from larger banks. However, unlike BMPRS we did not find that this was because larger firms are more transparent. Together these results imply that large banks do not necessarily have a comparative advantage in extending transactions-based lending. We also found like BMPRS that smaller banks have strong relationships with their borrowers. However, we find that banking relationships in the U.S. and Japan are strong in somewhat different dimensions. Our paper clarifies these and other interesting similarities and differences between the U.S. and Japan.

JEL-codes: D82 D83 G21 G32 L22 (search for similar items in EconPapers)
Date: 2007-04
New Economics Papers: this item is included in nep-ban
Note: CF IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published as Uchida, Hirofumi & Udell, Gregory F. & Watanabe, Wako, 2008. "Bank size and lending relationships in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 22(2), pages 242-267, June.
Published as Bank Size and Lending Relationships in Japan , Hirofumi Uchida, Gregory F. Udell, Wako Watanabe. in Organizational Innovation and Firm Performance , Baker, Hoshi, Itoh, and Nagaoka. 2008

Downloads: (external link)
http://www.nber.org/papers/w13005.pdf (application/pdf)

Related works:
Chapter: Bank Size and Lending Relationships in Japan (2008)
Journal Article: Bank size and lending relationships in Japan (2008)
Working Paper: Bank Size and Lending Relationships in Japan (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:13005

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w13005

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().