As a result of deregulation, there was a dramatic shift during the 1980s in Japan away from bank debt financing towards public debt financing: in 1975, more than 90% of the corporate debt of public companies was bank debt; in 1992 it was less than 50%. This paper presents a theory of the choice between bank debt and public debt and then examines the theory using firm level data on borrowing sources in Japan. We find that high net worth companies are more prone to use public debt. We also find that the more successful members of industrial groups (or keiretsu) and less successful owner-managed firms tended to access the public debt markets. We offer a number of interpretations of these results in light of the theory.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
4421.
Length: Date of creation: Aug 1993 Date of revision: Handle: RePEc:nbr:nberwo:4421
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Find related papers by JEL classification: G3 - Financial Economics - - Corporate Finance and Governance G2 - Financial Economics - - Financial Institutions and Services
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Alan J. Auerbach, 1985.
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Jeffrey K. MacKie-Mason, 1990.
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NBER Chapters,
in: Asymmetric Information, Corporate Finance, and Investment, pages 63-104
National Bureau of Economic Research, Inc.
[Downloadable!]
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