Consolidation of Banks in Japan: Causes and Consequences

66 Pages Posted: 14 Sep 2007 Last revised: 13 Aug 2021

See all articles by Kaoru Hosono

Kaoru Hosono

Gakushuin University - Economics

Koji Sakai

Hitotsubashi University - Japan Society for the Promotion of Science

Kotaro Tsuru

Research Institute of Economy, Trade and Industry (RIETI)

Date Written: September 2007

Abstract

We investigate the motives and consequences of the consolidation of banks in Japan during the period of fiscal year 1990-2004 using a comprehensive dataset. Our analysis suggests that the government's too-big-to-fail policy played an important role in the mergers and acquisitions (M&As), though its attempt does not seem to have been successful. The efficiency-improving motive also seems to have driven the M&As conducted by major banks and regional banks in the post-crisis period, while the market-power motive seems to have driven the M&As conducted by regional banks and corporative (shinkin) banks. We obtain no evidence that supports managerial motives for empire building.

Suggested Citation

Hosono, Kaoru and Sakai, Koji and Tsuru, Kotaro, Consolidation of Banks in Japan: Causes and Consequences (September 2007). NBER Working Paper No. w13399, Available at SSRN: https://ssrn.com/abstract=1014346

Kaoru Hosono (Contact Author)

Gakushuin University - Economics ( email )

1-5-1 Mejiro, Toshima-ku
Tokyo 171-8588
Japan

Koji Sakai

Hitotsubashi University - Japan Society for the Promotion of Science ( email )

1-8 Ichiban-cho, Chiyoda-ku
Tokyo 1868601, 102-8472
Japan

Kotaro Tsuru

Research Institute of Economy, Trade and Industry (RIETI) ( email )

1-3-1 Kasumigaseki
Chiyoda-ku
Tokyo 100-8901
Japan

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