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The time has come for banks to say goodbye: New evidence on bank roles and duration effects in relationship terminations

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  • Nakashima, Kiyotaka
  • Takahashi, Koji

Abstract

Examining a loan-level matched sample of Japanese banks and firms, we study the factors determining the termination of bank–firm relationships. We find that such terminations are mainly driven by bank-side factors and that these bank-driven terminations increase when banks’ capital conditions worsen. Furthermore, a longer relationship duration decreased the probability of termination substantially when the Japanese banking system was stable, whereas the duration effects weakened when the system became fragile.

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  • Nakashima, Kiyotaka & Takahashi, Koji, 2020. "The time has come for banks to say goodbye: New evidence on bank roles and duration effects in relationship terminations," Journal of Banking & Finance, Elsevier, vol. 115(C).
    • Handle: RePEc:eee:jbfina:v:115:y:2020:i:c:s0378426620300807
    DOI: 10.1016/j.jbankfin.2020.105813
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    More about this item

    Keywords

    Matched lender–borrower data; Bank–firm relationship; Capital crunch; Evergreening; Flight to quality; Duration effect; Long-term contract;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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