TY  - JOUR
AU  - Hoshi,Takeo
AU  - Kashyap,Anil
AU  - Scharfstein,David
TI  - The Choice Between Public and Private Debt: An Analysis of Post-Deregulation Corporate Financing in Japan
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4421
PY  - 1993
Y2  - August 1993
UR  - http://www.nber.org/papers/w4421
L1  - http://www.nber.org/papers/w4421.pdf
N1  - Author contact info:
Takeo Hoshi
School of International Relations and Pacific Stud
University of California, San Diego
9500 Gilman Drive
La Jolla, CA  92093-0519
Tel: 858/534-5018
Fax: 858/534-3939
E-Mail: thoshi@ucsd.edu

Anil Kashyap
Booth School of Business
University of Chicago
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-7260
Fax: 773/702-0458
E-Mail: anil.kashyap@chicagobooth.edu

David S. Scharfstein
Harvard Business School
Baker 239
Soldiers Field
Boston, MA 02163
Tel: 617/496-5067
Fax: 617/496-8443
E-Mail: dscharfstein@hbs.edu
AB  - As a result of deregulation, there was a dramatic shift during the 1980s in Japan away from bank debt financing towards public debt financing: in 1975, more than 90% of the corporate debt of public companies was bank debt; in 1992 it was less than 50%. This paper presents a theory of the choice between bank debt and public debt and then examines the theory using firm level data on borrowing sources in Japan. We find that high net worth companies are more prone to use public debt. We also find that the more successful members of industrial groups (or keiretsu) and less successful owner-managed firms tended to access the public debt markets. We offer a number of interpretations of these results in light of the theory.
ER  -