The decline of bank ownership and firm’s capital structure: evidence from Japanese business groups

El Kalak, Izidin ORCID: https://orcid.org/0000-0002-2992-4042, Mazouz, Khelifa ORCID: https://orcid.org/0000-0001-6711-1715 and Yamada, Kazuo 2024. The decline of bank ownership and firm’s capital structure: evidence from Japanese business groups. Applied Economics 10.1080/00036846.2024.2364092 Item availability restricted.

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Abstract

This paper examine how firms adjust their capital structure when their relationship with banks weaken. To this end, we use the data from Japan, a country that has experienced a sharp decline in the traditional bank-oriented business group system after its banking crisis in the late 1990s. We document the decline of financial leverage of Japanese firms after the crisis. The dynamic GMM model reveals that the decline is pronounced as the bank’s influence weakens firm’s financial leverage decreases. Finally, we show that as the bank relationship weakens, the speed of adjustment for target leverage fastens. These results indicate that the shift of bank-oriented to market-oriented economic system change the firm’s financial decision making.

Item Type:	Article
Date Type:	Published Online
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HG Finance
Publisher:	Taylor and Francis Group
ISSN:	0003-6846
Date of First Compliant Deposit:	15 July 2024
Date of Acceptance:	25 May 2024
Last Modified:	09 Nov 2024 11:15
URI:	https://orca.cardiff.ac.uk/id/eprint/170069

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