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"Banks' Monitoring and Profitability of Borrowing Firms"(in Japanese)

Author

Listed:
  • Masayo Tomiyama

    (Graduate School of Economics, Hitotsubashi University)

  • Kyoji Fukao

    (Institute of Economics, Hitotsubashi University)

  • Qing-yuan Sui

    (Faculty of Economics and Business Administration, Yokohama City University)

  • Kiyohiko G. Nishimura

    (Faculty of Economics, University of Tokyo)

Abstract

We constructed measures representing the magnitude of Japanese banks' monitoring activities and tested two competing hypotheses about nature of banks' monitoring, (1) the monitoring improved profitability of borrowing firms and (2) it simply "screened" out unprofitable firms, by using the data of all Japanese corporations listed in the Tokyo Stock Exchange between 1986 and 1997. The result was inconsistent with the profitability-improving hypothesis of banks' active involvement in borrowing firms, and strongly suggested the banks' passive role as a screening device.

Suggested Citation

  • Masayo Tomiyama & Kyoji Fukao & Qing-yuan Sui & Kiyohiko G. Nishimura, 2001. ""Banks' Monitoring and Profitability of Borrowing Firms"(in Japanese)," CIRJE J-Series CIRJE-J-46, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:jseres:2001cj46
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2001/2001cj46.pdf
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