Bank uniqueness tests : the evidence from Japanese credit market data /
The purpose of this study is to conduct empirical tests of the bank uniqueness hypothesis by using detailed credit data on loans by specific banks and other financial institutions to individual Japanese firms. By applying the credit market hierarchy proposition of Carey, Prowse and Udell (1993) to...
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| Format: | Thesis Book |
| Language: | English |
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[Place of publication not identified] :
[publisher not identified] ;
2000.
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| Online Access: | http://proxy.library.tamu.edu/login?url=http://proquest.umi.com/pqdweb?did=727843101&sid=1&Fmt=2&clientId=2945&RQT=309&VName=PQD |
| Summary: | The purpose of this study is to conduct empirical tests of the bank uniqueness hypothesis by using detailed credit data on loans by specific banks and other financial institutions to individual Japanese firms. By applying the credit market hierarchy proposition of Carey, Prowse and Udell (1993) to Japanese loan data, which contains breakdowns of loan size by types of financial institutions and by individual banks with which firms have borrowing relationships, this study reports direct tests of whether client firms' risk and information characteristics have predictive power in discriminating between firms with concentrated loans with a main bank (depository institutions) versus other banks (nondepository institutions). The first hypothesis is that a concentrated daily settlement account gives banks an important advantage in information acquisition about client firms. This settlement account hypothesis is tested by gathering a sample of firms with high and low proportions of loans from a main bank relative to depository financial institutions. The results indicate that firms with information problems are more likely to carry high proportions of loans from a main bank. However, the results did not reveal any significant differences in risk characteristics between firms with high versus low amounts of credit outstanding with their respective main banks. As such, it is concluded that main banks managing daily settlement accounts of client firms have a unique advantage in acquiring information about their client firms. The second hypothesis is that banks gain an information advantage from deposit holding. Two characteristics of deposit funding for banks are examined: (1) the liquidity of deposits and (2) the stickiness of deposit rates. This study documents that small and high risk firms tend to prefer depository institutions for loans. The results for the risk variables across different types of financial institutions imply that regulation implemented to curb risk taking on the part of deposit-taking institutions may not constrain their behavior. Instead, the evidence suggests that liability and loan structure differences among financial institutions affected their preferences for risk-taking in credit portfolios. |
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| Item Description: | Vita. "Major Subject: Finance". |
| Physical Description: | ix, 118 leaves ; 28 cm. Issued also on microfiche from University Microfilm Inc. |
| Bibliography: | Includes bibliographical references (leaves 91-94). |