Are Banks Affiliated with Bank Holding Companies More Efficient Than Independent Banks? The Recent Experience Regarding Japanese Regional BHCs

Yamori, Nobuyoshi; Harimaya, Kozo; Kondo, Kazumine

doi:10.1007/s10690-005-4246-7

Cited by 23 publications

(7 citation statements)

References 15 publications

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“…Firstly, we focus on organizational forms of banks as these characteristics, because using data from Japanese regional banks, Yamori et al (2003) confirm that banks affiliated with BHC are more profit-efficient than independent banks. Yamori et al(2003) has suggested that that Japanese banks affiliated with bank holding companies (BHCs) are more profit-efficient than are independent banks. Therefore, it is possible that BHCs will implement revenue diversification derived from their activities in securities, insurance, and fiduciary business more efficiently than independent banking companies will.…”

Section: Specificationmentioning

confidence: 99%

“…In addition, we account for the possibility of non-linearity that the effects of revenue diversification on franchise value or risk measures are affected by organizational form of banks and their performances in traditional banking business, because it is considered that banks that perform well in traditional banking business can more effectively implement their revenue diversification than those banks that perform badly. In addition, Yamori et al (2003) confirm that Japanese banks affiliated with bank holding companies (BHCs) are more profit-efficient than are independent banks. Therefore, it is plausible that BHC organizations may implement revenue diversification more efficiently than do independent banking organizations.…”

Section: Introductionmentioning

confidence: 96%

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How does the stock market value bank diversification? Empirical evidence from Japanese banks

Sawada

2013

Pacific-Basin Finance Journal

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This paper empirically examines the effect of bank's revenue diversification across different activities on the stock-based return and risk measures using data on the Japanese banking sector. In the analyses, we measure non-interest income share as a measure for revenue diversification of banks. These analyses confirm the positive effect of revenue diversification by increasing non-interest income share on the franchise values of banks, while there is no strong evidence that it reduce bank risks. In contrast, when non-interest income is broken down into its constituent parts-fee income, trading income and other non-interest income-we find that a shift toward fee income-generating business decreases all types of risks (systematic risk, idiosyncratic risk, and total risk). Furthermore, we find that the effects of bank's revenue diversification on franchise value and risks are contingent on organizational forms and performance of traditional banking business. JEL Classification: G11, G21, G28

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Section: Specificationmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 96%

How does the stock market value bank diversification? Empirical evidence from Japanese banks

Sawada

2013

Pacific-Basin Finance Journal

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“…Soft information is defined as information that is difficult to communicate in a 1 Amel, Barnes, Panetta, and Salleo [2004] and Berger, Demsetz, and Strahan [1999] provide concise literature reviews on this subject. 2 The literature along this line includes Cornnet, McNutt, and Tehranian [2004], Hosono, Sakai, and Tsuru [2006], Houston, James, and Ryngaert [2001], Humphrey and Vale [2004], Kane [2000], Knapp, Gart, and Becher [2005], Penas and Unall [2004], Rhodes [1998], Rime and Stiroh [2003], Stiroh [2000], Stiroh and Rumble [2006], and Yamori, Harimaya, and Kondo [2003]. 3 As for deposit interest rates, it is found that they temporarily go down after bank mergers (Prager and Hannan [1998]) but eventually go up as efficiency gains materialize in the long-run (Focarelli and Panetta [2003]).…”

Section: Introductionmentioning

confidence: 99%

Bank Consolidation and Soft Information Acquisition in Small Business Lending

Ogura

Uchida

2008

SSRN Journal

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We empirically examine the impact of bank consolidation on bankers' acquisition of soft information about borrowers. Using a dataset of small businesses, we found that bank mergers have a negative impact on soft information acquisition by small banks while those by large banks that have less interest in acquiring soft information irrespective of mergers have no impact.Detailed analyses of the post-merger organizational restructuring show that the measures of an increase in organizational complexity have a negative and significant impact on soft information acquisition by small banks, while the measures of cost-cut do not have any significant impact on soft information acquisition. This result implies that the increase in organizational complexity by bank mergers hindered soft information acquisition, which is consistent with Stein's prediction [2002, J. Fin.] on the comparative advantage of simple and flat organizations in acquiring and processing soft information.

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“…Numerous BHCs have also been established in Japan [8]. However, Yamori et al (2003) found that regional banks affiliated with BHCs are not more cost efficient than independent banks, while the issue of bank branch expansion is not investigated. To the best of our knowledge, very few studies have investigated the issue of branch networks in the context of Japanese banks.…”

Section: Introductionmentioning

confidence: 99%

Effects of branch expansion on bank efficiency: evidence from Japanese regional banks

Harimaya

Kondo

2016

Managerial Finance

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Although the Japanese financial regulators have been promoting region-based relationship banking in recent years, many regional banks expand their branch network. This paper investigates the effects of branch expansion on cost and profit efficiency for the Japanese regional banks over the period of fiscal year 1999-2009. The principal findings are as follows: First, focusing on the local activities without expanding branch network is associated with improved cost efficiency. Also, regional banks expanding branch network in certain level exhibit higher cost efficiency, whereas excessive branch expansion causes lower cost efficiency. Next, in contrast to the results for cost efficiency, regional banks focusing on the local activities exhibit lower profit efficiency. However, our results indicate that excessive branch expansion also relates to lower profit efficiency. Finally, robustness results are obtained from the samples excluding regional banks located in urban regions. The findings in this paper suggest that an adequate levels of branch expansion have positive impacts on both cost and profit efficiencies for regional banks through diversifying banks' portfolio, etc.

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Are Banks Affiliated with Bank Holding Companies More Efficient Than Independent Banks? The Recent Experience Regarding Japanese Regional BHCs

Cited by 23 publications

References 15 publications

How does the stock market value bank diversification? Empirical evidence from Japanese banks

How does the stock market value bank diversification? Empirical evidence from Japanese banks

Bank Consolidation and Soft Information Acquisition in Small Business Lending

Effects of branch expansion on bank efficiency: evidence from Japanese regional banks

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