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The Main Bank System and Corporate Investment: An Empirical Reassessment

Fumio Hayashi

No 6172, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines whether the sensitivity of corporate investment to internal funds depends on the firm's access to a main bank, using the sample of Japanese manufacturing firms constructed by Hayashi and Inoue (1991). For either of two classifications of firms by their access to a main bank, there is no evidence that main bank ties mitigate the sensitivity of investment to the firm's liquidity. The large effect of main bank ties reported in Hoshi, Kashyap, and Scharfstein (1991) is most likely due to the relatively poor quality of their capital stock estimate.

JEL-codes: E22 G3 (search for similar items in EconPapers)
Date: 1997-09
Note: EFG
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Published as Aoki, M. and G. Saxonhouse (eds.) Finance, Governance, and Competitiveness in Japan. Oxford University Press, 2000.

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