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Japanese Financial Relationships in Transition

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  • Kenji Kojima

    (Kobe University)

Abstract

This paper presents Japanese financial relationships in an international perspective.The primary purpose of the study is threefold: to identify important features of financial relationships in Japan and those structural changes; to provide economic rationale for those relationships and changes; and to develop insights concerning corporate finance and capital market under institutional and regulatory environments. Corporate finance in Japan has evolved around the main bank relationships. Financial liberalization in Japan has created difficulties for the main bank relationships. The process of change will continue, both because of continuing liberalization and because some financial patterns change sluggishly. Increasing financial sophistication and capability to exploit opportunities arising from regulatory changes will also continue to alter corporate financial practices. Financial liberalization tends to undermine the main bank system because major non-financial firms have greater access to arm's length debt as well as borrowing from foreign financial institutions.

Suggested Citation

  • Kenji Kojima, 1998. "Japanese Financial Relationships in Transition," Kobe Economic & Business Review, Research Institute for Economics & Business Administration, Kobe University, vol. 42, pages 55-96, February.
  • Handle: RePEc:kob:review:feb1998::v:42:p:55-96
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    Keywords

    Cross-share holding; Financial liberalization; Financial relationships; Main bank;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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