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Effects of a bank consolidation promotion policy: Evaluating Bank Law in 1927 Japan

Tetsuji Okazaki and Michiru Sawada

No CIRJE-F-400, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: This paper investigates the impact of bank consolidations promoted by government policy, using data from pre-war Japan when the Ministry of Finance promoted bank consolidations by dint of the Bank Law of 1927. It is found that policy-promoted consolidation had a positive effect on deposit growth, especially in the period when the financial system was unstable. On the other hand, it had a negative effect on profitability, particularly when there was no dominant bank among the participants or when more than two banks participated in the consolidation. Policy-promoted consolidation in such cases was likely to be accompanied by large organizational cost.

Pages: 37pages
Date: 2006-02
New Economics Papers: this item is included in nep-com, nep-fmk, nep-his and nep-sea
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Related works:
Working Paper: Effects of bank consolidation promotion policy: Evaluating the Bank Law in 1927 Japan (2004) Downloads
Working Paper: Effects of Bank Consolidation Promotion Policy: Evaluating the Bank Law in 1927 Japan (2004) Downloads
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