Effects of a bank consolidation promotion policy: Evaluating Bank Law in 1927 Japan
AbstractThis paper investigates the impact of bank consolidations promoted by government policy, using data from pre-war Japan when the Ministry of Finance promoted bank consolidations by dint of the Bank Law of 1927. It is found that policy-promoted consolidation had a positive effect on deposit growth, especially in the period when the financial system was unstable. On the other hand, it had a negative effect on profitability, particularly when there was no dominant bank among the participants or when more than two banks participated in the consolidation. Policy-promoted consolidation in such cases was likely to be accompanied by large organizational cost.
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Date of creation: Feb 2006
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-03-11 (All new papers)
- NEP-COM-2006-03-11 (Industrial Competition)
- NEP-FMK-2006-03-11 (Financial Markets)
- NEP-HIS-2006-03-11 (Business, Economic & Financial History)
- NEP-SEA-2006-03-11 (South East Asia)
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- Jean-Pascal Bassino & Thomas Lagoarde-Segot, 2013. "Trading patterns at the Tokyo Stock Exchange, 1931-1940," CEH Discussion Papers 012, Centre for Economic History, Research School of Economics, Australian National University.
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