Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
11023278 | Journal of Financial Stability | 2018 | 20 Pages |
Abstract
In this study we use a matched dataset of Japanese banks and firms to examine how bank-driven terminations of bank-borrower relationships affect the investments of the borrowers. We find that bank-driven terminations significantly decrease investment, exerting an effect that exceeds that due to credit reductions within continuing relationships. Our results also show that the unwanted effect of bank-driven terminations grows as the loan market deteriorates as a whole, which prevents firms from obtaining funding from other sources after their relationships with banks are terminated. Our findings coincide with previous literature emphasizing financial frictions in the matching process and the importance of relation-specific assets in credit markets.
Keywords
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics, Econometrics and Finance (General)
Authors
Kiyotaka Nakashima, Koji Takahashi,