Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5086260 | Japan and the World Economy | 2009 | 7 Pages |
Abstract
This paper empirically investigates the determinants of subordinated debt issuance by Japanese regional banks during the period of 2000-2007 using a probit model. The empirical results suggest the following. (i) Throughout the period, Japanese regional banks with a lower capital ratio tended to have a higher incentive to issue subordinated debts due possibly to their counting as Tier 2 capital under the Basel Accord. (ii) During the period of banking instability (2000-2003), subordinated debt investors tended to use financial variables such as the non-performing loan ratio, ROA, and ROE to screen good banks. (iii) During the period after the banking system regained stability (2004-2007), investors tended to pay less attention to the above variables due chiefly to the mitigated default risk of these banks.
Related Topics
Social Sciences and Humanities
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Economics and Econometrics
Authors
Naohiko Baba, Masakazu Inada,