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Disciplinary Pressure is More Necessary for Cooperative Banks Than Stock Banks: Results from Bank Efficiencies Estimation

Listed author(s):
  • Kozo Harimaya

    (College of Business Administration, Ritsumeikan University)

  • Kei Tomimura

    (Faculty of Business Administration, Aichi University)

  • Nobuyoshi Yamori

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

How to discipline managers of cooperative structured financial institutions (co-ops) is considered to be a critical issue by the Japanese financial regulatory authorities, because co-ops play a significant role in the domestic banking market, especially for small and medium-sized enterprises. This paper seeks to clarify whether the effect of the governance-related variables on firm performance varies across stock and cooperative banks in Japan. The results in this paper confirmed that the presence of outside directors has a significant effect on efficiency measures for cooperative banks. In contrast, such variables have no significant effect for stock banks. These results suggest that outsider directors’ discipline is more necessary for cooperative banks than stock banks, which are under strong pressure from shareholders.

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File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2015-05.pdf
File Function: Revised version, 2016
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Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number DP2015-05.

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Length: 24 pages
Date of creation: Feb 2015
Date of revision: May 2016
Handle: RePEc:kob:dpaper:dp2015-05
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