Bank monitoring and the maturity structure of Japanese corporate debt issues

Jun CAI, Yan Leung Stephen CHEUNG, Vidhan K. GOYAL

Research output: Contribution to journalArticle

15 Citations (Scopus)

Abstract

Extant literature suggests that bank lending results in greater information production and control over corporate borrowers. We show that bank lending creates positive externalities in that it improves the contracting environment for other public debt providers. Focusing on the maturity structure of Japanese corporate debt issues, we provide evidence that a higher proportion of bank debt results in public debt of longer maturity. More importantly, the sensitivity of the debt maturity to bank debt ratio is significantly higher for independent firms compared with that of keiretsu-affiliated firms. The evidence is consistent with keiretsu firms having less agency costs of debt compared with independent firms. Copyright © 1999 Elsevier Science B.V. All rights reserved.

Original languageEnglish
Pages (from-to)229-250
JournalPacific Basin Finance Journal
Volume7
Issue number3-4
DOIs
Publication statusPublished - Aug 1999

Fingerprint

Bank monitoring
Corporate debt
Maturity
Bank lending
Keiretsu
Bank debt
Public debt
Debt maturity
Information production
Debt ratio
Proportion
Agency costs of debt
Contracting
Positive externalities
Information control

Citation

Cai, J., Cheung, Y.-L., & Goyal, V. K. (1999). Bank monitoring and the maturity structure of Japanese corporate debt issues. Pacific-Basin Finance Journal, 7(3-4), 229-250.

Keywords

  • Debt maturity
  • Japanese corporate finance
  • Bank monitoring
  • Agency costs