Institutions, Relationships and Bank Competition in Bond Underwriting Markets: An International Comparative Study
AbstractThis paper addresses the question of whether existing institutional differences in banking systems affect bank competition in capital markets. Post-deregulation competition between entrant commercial banks and incumbent investment banks in the Japanese corporate bond underwriting market is empirically analyzed and compared with the results of the U.S. study in (Yasuda 2001b). I find that the certification effect alone cannot explain both the differences and similarities in the results. Drawing from the comparative banking literature, I interpret these findings as coming from the presence of "betrayal cost" in Japan and its absence in the U.S. These differences in the economic roles of relationships, as shaped by differences in the history of banking and corporate financing institutions, appear to persist in bank competition in the deregulated market.
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Bibliographic InfoPaper provided by Wharton School Center for Financial Institutions, University of Pennsylvania in its series Center for Financial Institutions Working Papers with number 01-31.
Date of creation: Jul 2001
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This paper has been announced in the following NEP Reports:
- NEP-ACC-2001-08-30 (Accounting & Auditing)
- NEP-ALL-2001-08-30 (All new papers)
- NEP-FMK-2001-08-30 (Financial Markets)
- NEP-SEA-2001-08-30 (South East Asia)
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