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Banking Relationships in East Asian Economies: Lessons for Developing Countries

In: Studies On Financial Markets In East Asia

Author

Listed:
  • Sarwar Uddin Ahmed

    (School of Business, Independent University, Bangladesh)

  • Shigeru Uchida

    (Faculty of Economics, Nagasaki University, Japan)

Abstract

This paper aims at examining the impact of relationship banking in East Asian economies and suggest lessons for developing countries especially, Bangladesh. In doing so, we have selected the case of Japan and Korea as representatives of East Asia. Accordingly, we have found that both Japan and Korea have positive impacts of relationship banking on firm profitability by ensuring easy access to credit and rescue during financial distress, which are achieved by the banks by firm shareholding and participation in firm management decision in addition to lending. But in Bangladesh relationship banking is mainly confined up to lending. Hence in order to maximize the benefits of relationship banking in the early stage of industrialization, equity shareholding and management advisory services provided by the banks should also be incorporated in relationship banking structure.

Suggested Citation

  • Sarwar Uddin Ahmed & Shigeru Uchida, 2011. "Banking Relationships in East Asian Economies: Lessons for Developing Countries," World Scientific Book Chapters, in: Masayuki Susai & Shigeru Uchida (ed.), Studies On Financial Markets In East Asia, chapter 6, pages 89-99, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814343374_0006
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