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Bankruptcies of small firms and lending relationship

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  • Shimizu, Katsutoshi

Abstract

This paper empirically investigates the role played by relatively small banks in the Japanese local credit market. We test the hypothesis that small banks enhance the recovery rate from the financial distress and reduce the bankruptcy ratio of small firms. Empirical evidence suggests that small banks specialize more in relationship loans to small firms. However, this expertise is limited to the loans to unincorporated firms or those with a very small number of employees.

Suggested Citation

  • Shimizu, Katsutoshi, 2012. "Bankruptcies of small firms and lending relationship," Journal of Banking & Finance, Elsevier, vol. 36(3), pages 857-870.
  • Handle: RePEc:eee:jbfina:v:36:y:2012:i:3:p:857-870
    DOI: 10.1016/j.jbankfin.2011.09.016
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. OGANE Yuta, 2017. "Effects of Main Bank Switch on Small Business Bankruptcy," Discussion papers 17019, Research Institute of Economy, Trade and Industry (RIETI).
    2. Diana Bonfim & Qinglei Dai, 2017. "Bank Size and Lending Specialisation," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 46(2), pages 329-380, July.
    3. Yuta Ogane, 2016. "Banking relationship numbers and new business bankruptcies," Small Business Economics, Springer, vol. 46(2), pages 169-185, February.
    4. Antonio Pedro Soares Pinto & Mario Gomes Augusto, 2014. "Are There Non-linear Effects of Banking Relationships and Ownership Concentration on Operational Performance? Empirical Evidence from Portuguese SMEs Using Cross-section Analysis and Panel Data," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 5(4), pages 67-84, October.
    5. Höwer, Daniel, 2016. "The role of bank relationships when firms are financially distressed," Journal of Banking & Finance, Elsevier, vol. 65(C), pages 59-75.

    More about this item

    Keywords

    Lending relationship; Japanese banks; Nonperforming loans; Bankruptcy; Small business; Credit union;

    JEL classification:

    • 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
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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