Consolidation of Banks in Japan: Causes and Consequences

Kaoru Hosono, Koji Sakai, Kotaro Tsuru

NBER Working Paper No. 13399
Issued in September 2007
NBER Program(s):   ME   IO

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.

(473 K)

Published: Consolidation of Banks in Japan: Causes and Consequences, Kaoru Hosono, Koji Sakai, Kotaro Tsuru, in Financial Sector Development in the Pacific Rim, East Asia Seminar on Economics, Volume 18 (2009), University of Chicago Press

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Acknowledgments

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