Measuring the Extent and Implications of Director Interlocking in the Prewar Japanese Banking Industry
AbstractIn prewar Japan, many banks were controlled by industrial companies through capital and personal relationships. The literature has pointed out that those banks engaged in unsound lending to their related companies, which resulted in damage to the financial system (organ bank hypothesis). In this article we examine this hypothesis by measuring director interlocking between banks and nonbanking companies. It was found that more than 80 percent of ordinary banks had director interlocking with at least one nonbanking company. Also, regression analyses confirmed that director interlocking had a negative effect on bank performance, especially for smaller banks.
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Bibliographic InfoArticle provided by Cambridge University Press in its journal The Journal of Economic History.
Volume (Year): 65 (2005)
Issue (Month): 04 (December)
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Other versions of this item:
- Tetsuji Okazaki & Kazuki Yokoyama, 2001. "Measuring the Extent and Implications of Director Interlocking in the Pre-war Japanese Banking Industry," CIRJE F-Series CIRJE-F-138, CIRJE, Faculty of Economics, University of Tokyo.
- Tetsuji Okazaki & Michiru Sawada & Kazuki Yokoyama, 2005. "Measuring the Extent and Implications of Director Interlocking in the Pre-war Japanese Banking Industry," CIRJE F-Series CIRJE-F-355, CIRJE, Faculty of Economics, University of Tokyo.
- Tetsuji Okazaki & Michiru Sawada & Kazuki Yokoyama, 2003. "Measuring the Extent and Implications of Director Interlocking in the Pre-war Japanese Banking Industry," CIRJE F-Series CIRJE-F-241, CIRJE, Faculty of Economics, University of Tokyo.
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- Kiril Danailov Kossev, 2008. "The Banking Sector and the Great Depression in Bulgaria, 1924 - 1938: Interlocking and Financial Sector Profitability," Working Papers 76, Bank of Greece.
- Yokoyama, Kazuki, 2007. "Too Big to Fail: the Panic of 1927," MPRA Paper 2768, University Library of Munich, Germany.
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