NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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.

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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 (p. 265 - 309)

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