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Importance of regional financial institutions in regional economic development: Based on the results of corporate surveys in Japan's Tokai and Kansai regions

Nobuyoshi Yamori ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper has analyzed the relationship between medium/small firms and financial institutions based on the results of questionnaires prepared for medium/small firms in the Tokai and Kansai regions. With the development of telecommunication technology and progress in securities market infrastructure, there are fewer cases in which geographical distance poses a problem in financial transactions. However, financing for medium/small firms is expected to remain dependent on indirect finance, i.e., financing through their major trading bank, inasmuch as it will be necessary for financial institutions to play a major role in overcoming the problem of information asymmetry in that sector. More specifically, this type of relationship banking in which periodical and direct contact lends to increased company knowledge is thriving as a means to eliminate the issue of information asymmetry. The direct contact or communication, an integral part of relationship banking entail costs, and can become difficult when banks locate far from firms.

Keywords: Regional Finance; Japan; Bank; SME Finance (search for similar items in EconPapers)
JEL-codes: O53 G32 G21 (search for similar items in EconPapers)
Date: 2008-09
New Economics Papers: this item is included in nep-ban and nep-geo
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Working Paper: Importance of Regional Financial Institutions in Regional Economic Development: Based on the results of corporate surveys in Japan's Tokai and Kansai regions (2008) Downloads
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