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The Fable of the Keiretsu


Yoshiro Miwa


Osaka Gakuin University

J. Mark Ramseyer


Harvard Law School

March 2001

Harvard Law and Economics Discussion Paper No. 316

Abstract:     
Central to so many accounts of post-war Japan, the keiretsu corporate groups have never had economic substance. Conceived by Marxists committed to locating "domination" by "monopoly capital," they found an early audience among western scholars searching for evidence of culture-specific group behavior in Japan. By the 1990s, they had moved into mainstream economic studies, and keiretsu dummies appeared in virtually all econometric regressions of Japanese industrial or corporate structure. Yet the keiretsu began as a figment of the academic imagination, and they remain that today.

The most commonly used keiretsu roster first groups large financial institutions by their pre-war antecedents. It then
assigns firms to a group if the sum of its loans from those institutions exceeds the amount it borrows from the next largest lender. Other rosters start by asking whether firm presidents meet occasionally with other presidents for lunch. Regardless of the definition used, cross-shareholdings were trivial even during the years when keiretsu ties were supposedly strongest, and membership has only badly proxied for "main bank" ties.

Econometric studies basing "keiretsu dummies" on these rosters have produced predictably haphazard results: some are a function of misspecified equations, while others depend on outlying data points and some are specific to one keiretsu roster but not others. The only reliably robust results are the artifacts of the sample biases created by the definitions themselves.

Number of Pages in PDF File: 38

JEL Classification: G3, K2, L1, P5

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Date posted: March 20, 2001  

Suggested Citation

Miwa, Yoshiro and Ramseyer, J. Mark, The Fable of the Keiretsu (March 2001). Harvard Law and Economics Discussion Paper No. 316. Available at SSRN: http://ssrn.com/abstract=263979 or http://dx.doi.org/10.2139/ssrn.263979

Contact Information

Yoshiro Miwa (Contact Author)
Osaka Gakuin University ( email )
2-36-1 Kishibe-Minami
Suita, Osaka 5645811
Japan
J. Mark Ramseyer
Harvard Law School ( email )
1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
617-496-4878 (Phone)
617-496-6118 (Fax)
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