Consolidation of Banks in Japan: Causes and Consequences
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.
We appreciate valuable comments from Andy Rose, Taka Ito, Hiro Ito, Barry Williams, and other participants at NBER EASE 18th Conference. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
Consolidation of Banks in Japan: Causes and Consequences, Kaoru Hosono, Koji Sakai, Kotaro Tsuru. in Financial Sector Development in the Pacific Rim, Ito and Rose. 2009