Cross-Prefecture Expansion of Regional Banks in Japan and Its Effects on Lending-Based Income

Kazumine Kondo

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines whether Japanese regional banks entering the banking market in other prefectures, including neighboring prefectures, can increase their lending-based income. To stimulate local economies and support local small- and medium-sized enterprises (SMEs), the current Japanese government’s policies for regional banks require these banks to engage in region-based relationship banking practices. In this study, three lending-based income measures were used as dependent variables, and estimation was made using panel data from Japanese regional banks. As a result, it was determined that regional banks that enter markets in other prefectures experience positive effects in all three lending-based income measures. Moreover, it was determined that regional banks whose headquarters are located in non-urban areas derive greater benefit from their loan businesses upon entry into other prefectures, including neighboring prefectures, where economic activity is more vibrant than regional banks whose headquarters are located in urban areas.

Keywords: regional banks; non-urban regional banks; region-based relationship banking; entries into other prefectures; lending-based income (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2014-01-16
New Economics Papers: this item is included in nep-ban and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:52978

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