NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Main Bank System and Corporate Investment: An Empirical Reassessment

Fumio Hayashi

NBER Working Paper No. 6172
Issued in September 1997
NBER Program(s):Economic Fluctuations and Growth

This paper examines whether the sensitivity of corporate investment to internal funds depends on the firm's access to a main bank, using the sample of Japanese manufacturing firms constructed by Hayashi and Inoue (1991). For either of two classifications of firms by their access to a main bank, there is no evidence that main bank ties mitigate the sensitivity of investment to the firm's liquidity. The large effect of main bank ties reported in Hoshi, Kashyap, and Scharfstein (1991) is most likely due to the relatively poor quality of their capital stock estimate.

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Document Object Identifier (DOI): 10.3386/w6172

Published: Aoki, M. and G. Saxonhouse (eds.) Finance, Governance, and Competitiveness in Japan. Oxford University Press, 2000.

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