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Seminar - Main Bank Relationships and Risk-Taking in Japanese Listed Firms

Speakers: Professor Hideaki Sakawa and Professor Naoki Watanabe, Nagoya City University, Japan
Time: Wednesday, 9 October 2019, 13:00-15:00
Venue: S314 (Paul Webley Wing, Senate House)

Abstract
Bank–firm relationships can play a role in the degree of corporate risk- taking that inspires financing decisions. We study whether or not the magnitude of corporate risk-taking is associated with close bank–firm ties in Japan. We use the publicly listed firms with the sample period from 2007 to 2016 after bank mergers periods and select risk variables like idiosyncratic risk and total risk as the proxies for corporate risk-taking. Our empirical evidence suggests that firms with close bank ties can drive firms to take less risks. The results remain unchanged even after controlling for the endogeneity. Finally, we observe that firms with smaller size and higher growth opportunity tend to decrease the degree of corporate risk-taking as they have close bank ties.

The seminars are sponsored by grants from DFID and ESRC [ESRC Ref: ES/N013344/2], ESRC and NSFC [ESRC Ref: ES/P005241/1] and AXA Research Fund