The Impact of Bank Entry in the Japanese Corporate Bond Underwriting Market
AbstractThe 1993 Japanese financial system reform allowed banks to enter the underwriting market for corporate bonds through bank-owned security subsidiaries. This paper examines empirically whether underwriting commissions and spreads for corporate bonds fell as a result of this bank entry. The empirical results show that bank entry significantly lowers underwriting commissions. Commissions charged by banks are significantly lower than those charged by investment houses. In contrast, there is no strong evidence that bond spreads are significantly lowered by bank entry. A main bank relationship between the issuing firm and the parent of a bank-owned underwriting subsidiary does not have any significant influence in commission setting or the determination of spreads
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Bibliographic InfoPaper provided by Econometric Society in its series Econometric Society 2004 Australasian Meetings with number 128.
Date of creation: 11 Aug 2004
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financial system reform; bank entry; bank share; commission; main bank; spread; underwriting;
Other versions of this item:
- Takaoka, Sumiko & McKenzie, C.R., 2006. "The impact of bank entry in the Japanese corporate bond underwriting market," Journal of Banking & Finance, Elsevier, vol. 30(1), pages 59-83, January.
- G2 - Financial Economics - - Financial Institutions and Services
- K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-10-30 (All new papers)
- NEP-COM-2004-10-30 (Industrial Competition)
- NEP-LAW-2004-10-30 (Law & Economics)
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