Bank incentives and suboptimal lending decisions: Evidence from the valuation effect of bank loan announcements in Japan

Journal of Banking and Finance

Volumn 32, Issue 6, 2008, Pages 915-929

  Kang, Jun Koo ^a   Liu, Wei Lin ^b  

^a MICHIGAN STATE UNIVERSITY   (United States)

^b NANYANG TECHNOLOGICAL UNIVERSITY   (Singapore)

Author keywords

Announcement return; Bank health; Bank loan; Wealth transfer

Indexed keywords

EID: 43049156147     PISSN: 03784266     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jbankfin.2007.06.010     Document Type: Article

References (30)

1. Ahearne A.G., and Shinada N. Zombie firms and economic stagnation in Japan. International Economics and Economic Policy 2 (2005) 363-381
2. Aoki M., Hugh P., and Paul S. The Japanese main bank system: An introductory overview. In: Masahiko A., and Hugh P. (Eds). The Japanese Main Bank System: Its Relevancy for Developing and Transforming Socialist Economies (1994), Oxford University Press, Cary, NC
3. Best R., and Zhang H. Alternative information sources and the information content of bank loans. Journal of Finance 4 (1993) 1507-1523
4. Billett M.T., Flannery M.J., and Garfinkel J.A. The effect of lender identity on borrowing firm's equity return. Journal of Finance 50 (1995) 699-718
5. Caballero, Ricardo, Takeo, Hoshi, Anil, Kashyap. 2005. Zombie lending and depressed restructuring in Japan, Working paper, University of Chicago Business School.
6. Campbell T.S., and Kracaw W.A. Information production, market signaling, and the theory of financial intermediation. Journal of Finance 35 (1980) 863-882
7. Diamond D.W. Financial intermediation and delegated monitoring. Review of Economic Studies 51 (1984) 393-414
8. Diamond D.W. Monitoring and reputation: The choice between banks and directly placed debt. Journal of Political Economy 99 (1991) 689-721
9. Fama E. What's different about banks?. Journal of Monetary Economics 10 (1985) 10-19
10. Gibson M.S. Can bank health affect investment? Evidence from Japan. Journal of Business 68 (1995) 281-308
11. Hoshi, Takeo, 2000. Naze nihon wa ryūdōsei no wanna kara nogarerareainoka? (Why is the Japanese economy unable to get out of a liquidity trap? In: Mitsuhiro, Fukao., Hiroshi, Yoshikawa (Eds.), Zero Kinri to Nihon Keizai (Zero Interest Rate and the Japanese Economy), Tokyo Nihon Keizai Shimbusha, pp. 233-266.
12. Hoshi T., Anil K., and David S. The role of banks in reducing the costs of financial distress in Japan. Journal of Financial Economics 27 (1990) 67-88
13. Hosono, Kaotu., Sakuragawa, Masaya, 2003. Soft budget problems in the Japanese credit market, Working paper, Nagoya City University.
14. James C. Some evidence of the uniqueness of bank loans. Journal of Financial Economics 19 (1987) 217-235
15. Kang J.-K., and Shivdasani A. Firm performance, corporate governance, and top executive turnover in Japan. Journal of Financial Economics 38 (1995) 29-58
16. Kang J.-K., and Stulz R. How different is Japanese corporate finance? An investigation of the information content of new security issues. Review of Financial Studies 9 (1996) 109-139
17. Kang J.-K., and Stulz R. Do banking shocks affect borrowing firm performance? An Analysis of the Japanese experience. Journal of Business 73 (2000) 1-23
18. Kaplan S., and Minton B. Appointments of outsiders to Japanese boards: Determinants and implications for managers. Journal of Financial Economics 36 (1994) 225-258
19. Lummer S., and McConnell J. Further evidence on the bank lending process and the capital market response to bank loan agreements. Journal of Finance Economics 25 (1989) 99-122
20. Masulis R.W. The debt-equity choice, Institutional Investor Series in Finance (1988), Ballinger, Press
21. Mikkelson W., and Partch M. Valuation effects of securities offerings and the issuance process. Journal of Financial Economics 15 (1986) 31-60
22. Morck R., Masao N., and Anil S. Banks, ownership structure, and firm value in Japan. Journal of Business 73 (2000) 539-568
23. Peek J., and Rosengren E.S. Unnatural selection: Perverse incentives and the misallocation of credit in Japan. American Economics Review 95 (2005) 1144-1166
24. Preece D.C., and Mullineaux D.J. Monitoring by financial intermediaries: Banks vs. nonbanks. Journal of Financial Service Research 4 (1994) 191-200
25. Rajan R. Insiders and outsiders: The choice between informed and arm's length debt. Journal of Finance 47 (1992) 1367-1400
26. Sekine T., Kobayashi K., and Yumi S. Forbearance lending: The case of Japanese firms. Monetary and Economic Studies 21 (2003) 69-91
27. Sharp S. Asymmetric information, bank lending, and implicit contracts: A stylized model of customer relationship. Journal of Finance 45 (1990) 1069-1087
28. Slovin M.B., Johnson S.A., and Glascock J.L. Firm size and the information content of bank loan announcements. Journal of Banking and Finance 16 (1992) 1057-1071
29. Smith Jr. C.W. Investment banking the capital acquisition process. Journal of Financial Economics 15 (1986) 3-29
30. Wansley, James W., Elayan, Fayez A. Collins, M. Cary., 1992. Investment opportunities and firm quality: An empirical investigation of the Information in bank lines of credit. Working paper, University of Tennessee.