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Have Banks Contributed to Efficient Management in Japan's Manufacturing?

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Author Info
Hanazaki, Masaharu
Horiuchi, Akiyoshi
Abstract

This paper statistically reexamines the conventional view that the main bank relationship has been an important element of corporate governance in Japan. According to the view, in postwar Japan, the main bank relationship has contributed to efficient management of borrower firms in place of the capital market that disciplines corporate management in the Anglo-American economy. Our analysis finds that neither the main bank relationship nor other capital market factors, which the standard governance theory regards as important determinants of managerial efficiency, consistently influenced efficiency of manufacturing firms' management defined by the total factor productivity (TFP). Instead, market competition, particularly competitive pressures from abroad, is found to have consistently enhanced management efficiency. Thus, the conventional view exaggerates importance of the main bank relationship in the Japanese corporate governance framework.

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Paper provided by Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University in its series CEI Working Paper Series with number 2003-22.

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Length: 26 p.
Date of creation: Nov 2003
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Handle: RePEc:hit:hitcei:2003-22

Note: May 2000
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Dallago, Bruno, 2003. "Comparative Economic Systems and the New Comparative Economics: Foes, Competitors, or Complementary?," CEI Working Paper Series 2003-24, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  2. Gennaioli, Nicola & Rossi, Stefano, 2008. "Judicial Discretion in Corporate Bankruptcy," CEI Working Paper Series 2008-5, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  3. Gennaioli, Nicola & Rossi, Stefano, 2008. "Optimal Resolutions of Financial Distress by Contract," CEI Working Paper Series 2008-6, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
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