The Main Bank Relationship in Japan :: GCSE Business Marketing Coursework

The Main border Relationship in Japan First, it is necessary to define what a Nipponese briny pious platitude is. The main(prenominal) situate is defined as the fiscal group (kinyu keiretsu in japanese) in the paper. Financial group is defined in principle by the amount of financing that a situateing concern supplies to a particular borrowing companionship. When a given company has taken taboo the largest amount of loans from a particular bank for the past three or more years consecutively, the company is viewed as belonging to that banks financial group. Nearly all the companies listed in the first section of capital of Japan Stock Exchange have a main bank. However, these companies borrow not just from their main bank, but from a large number of former(a) banks and financial institution as well. While the main bank is an chief(prenominal) lender, the company must also rely on loans from the main banks competitors which in sum far exceed those from the main bank itse lf.Although the generally accepted notion among researchers in that the main bank race in Japan is extremely stable, this evidence suggests that the Japanese main bank is one of much more fluidity than has been generally believed. Now, the paper presents round factors that might account for the actual changing patterns of main bank affiliations. These factors argon (a) the incredulity of companies operating performance, assuming the main bank relationship serves an serious function of risk-sharing between companies and banks, it fundament be derived that an increase in the uncertainty of the business environment for a specific industry should decrease the residuum of companies that change their main bank, thus, changes in main bank affiliation forget be systematically related to changes in the uncertainty of the performance of corporate borrowers (b) the history of the main bank relationship, as the accumulated value of the main bank relationship is assumed to be positively correlated with the length of the relationship, the longer a company has continued to maintain a main bank relationship with a specific bank, ceteris paribus, the less likely the company is to break that relationship off this proposition concerning the changeableness of the main bank relationship is also a testable one (c) the growth of the borrowing companies, it can be regarded as related to main bank changes in 2 ways first, the growth of a company raise its