"Banks' Monitoring and Profitability of Borrowing Firms"(in Japanese)

Masayo Tomiyama, Kyoji Fukao, Qing-yuan Sui and Kiyohiko G. Nishimura
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Masayo Tomiyama: Graduate School of Economics, Hitotsubashi University
Qing-yuan Sui: Faculty of Economics and Business Administration, Yokohama City University
Kiyohiko G. Nishimura: Faculty of Economics, University of Tokyo
Authors registered in the RePEc Author Service: Masayo Shikimi

No CIRJE-J-46, CIRJE J-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: We constructed measures representing the magnitude of Japanese banks' monitoring activities and tested two competing hypotheses about nature of banks' monitoring, (1) the monitoring improved profitability of borrowing firms and (2) it simply "screened" out unprofitable firms, by using the data of all Japanese corporations listed in the Tokyo Stock Exchange between 1986 and 1997. The result was inconsistent with the profitability-improving hypothesis of banks' active involvement in borrowing firms, and strongly suggested the banks' passive role as a screening device.

Pages: 31 pages
Date: 2001-02
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Persistent link: https://EconPapers.repec.org/RePEc:tky:jseres:2001cj46

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