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The Main Bank System and Corporate Investment: An Empirical Reassessment

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Fumio Hayashi

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Abstract

This paper examines whether the sensitivity of corporate investment to internal funds depends on the firm's access to a main bank, using the sample of Japanese manufacturing firms constructed by Hayashi and Inoue (1991). For either of two classifications of firms by their access to a main bank, there is no evidence that main bank ties mitigate the sensitivity of investment to the firm's liquidity. The large effect of main bank ties reported in Hoshi, Kashyap, and Scharfstein (1991) is most likely due to the relatively poor quality of their capital stock estimate.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6172.

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Date of creation: Sep 1997
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Handle: RePEc:nbr:nberwo:6172

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Find related papers by JEL classification:
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
G3 - Financial Economics - - Corporate Finance and Governance

References listed on IDEAS
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  1. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June. [Downloadable!] (restricted)
  3. Takeo Hoshi & Anil K. Kashyap, 1990. "Evidence on q and investment for Japanese firms," Finance and Economics Discussion Series 136, Board of Governors of the Federal Reserve System (U.S.).
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  4. Hayashi, Fumio & Inoue, Tohru, 1991. "The Relation between Firm Growth and Q with Multiple Capital Goods: Theory and Evidence from Panel Data on Japanese Firms," Econometrica, Econometric Society, vol. 59(3), pages 731-53, May. [Downloadable!] (restricted)
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  5. Hayashi, Fumio, 1985. "Corporate finance side of the Q theory of investment," Journal of Public Economics, Elsevier, vol. 27(3), pages 261-280, August. [Downloadable!] (restricted)
  6. Takeo Hoshi & Anil Kashyap & David Scharfstein, 1989. "Corporate structure, liquidity, and investment: evidence from Japanese industrial groups," Finance and Economics Discussion Series 82, Board of Governors of the Federal Reserve System (U.S.).
    Other versions:
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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. Yoshiro Miwa & J. Mark Ramseyer, 2001. "The Fable of the Keiretsu," CIRJE F-Series CIRJE-F-109, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
    Other versions:
  2. V. M. González-Méndez & F. González-Rodríguez, 2000. "Un análisis de los efectos de la crisis de Banesto sobre la banca y la industria," Investigaciones Economicas, Fundación SEPI, vol. 24(3), pages 611-640, September. [Downloadable!]
  3. Shin-ichi Fukuda & Ji Cong & Megumi Okui & Kenichi Okuda, 2000. "Long Term Loans and Investment in Japan: An Empirical Analysis Based on the Panel Data of Japanese Firms," CIRJE F-Series CIRJE-F-80, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
  4. Yuzo Honda & Kazuyuki Suzuki, 2006. "Is Cash Flow a Proxy for Financing Constraints in the Investment Equation? The Case of Unlisted Japanese Firms," Discussion Papers in Economics and Business 06-24, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP). [Downloadable!]
  5. Jason G. Cummins & Kevin A. Hassett & Stephen D. Oliner, 1999. "Investment behavior, observable expectations, and internal funds," Finance and Economics Discussion Series 1999-27, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
  6. Kaoru Hosono & Masayo Tomiyama & Tsutomu Miyagawa, 2004. "Corporate governance and research and development: evidence from Japan," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 13(2), pages 141-164, March. [Downloadable!] (restricted)
  7. Cummins, J.G. & Dey, M., 1998. "Taxation, Investment, and Firm Growth with Heterogeneous Capital," Working Papers 98-07, C.V. Starr Center for Applied Economics, New York University. [Downloadable!]
  8. Yoshiro Miwa & J. Mark Ramseyer, 2001. "The Myth of the Main Bank: Japan and Comparative Corporate Governance," CIRJE F-Series CIRJE-F-131, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
  9. Laurent Soulat, 2006. "Les modèles Q-investment et les modèles d'Euler : relations de banque principale, asymétries informationnelles et modifications des structures financières des firmes de keiretsu financier," Cahiers de la Maison des Sciences Economiques bla06010, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
  10. Jorge A. Chan-Lau, 2001. "The Impact of Corporate Governance Structures on the Agency Cost of Debt," IMF Working Papers 01/204, International Monetary Fund. [Downloadable!]
  11. Kyoji Fukao & Kiyohiko G. Nishimura & Qing-Yuan Sui & Masayo Tomiyama, 2004. "Japanese Banks' Monitoring Activities and the Performance of Borrower Firms: 1981-1996," Hi-Stat Discussion Paper Series d04-42, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
    Other versions:
  12. Masaharu Hanazaki & Akiyoshi Horiuchi, 2000. "Have Banks Contributed to Efficient Management in Japan's Manufacturing?," CIRJE F-Series CIRJE-F-76, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
  13. Kenichiro Suzuki & David Cobham, 2005. "Recent trends in the sources of finance for Japanese firms: has Japan become a 'high internal finance' country?," Discussion Paper Series, Department of Economics 0501, Department of Economics, University of St. Andrews. [Downloadable!]
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