The dark sides of institutionalized informal connections: evidence from the Japanese banking sector in the post-bubble crisis era

Kawai, Norifumi and Ko, Jong-Hwan (2012) The dark sides of institutionalized informal connections: evidence from the Japanese banking sector in the post-bubble crisis era. International Journal of Business, 17 (3). pp. 238-257. ISSN 1083-4346

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Abstract

This study focuses on the role of corporate political resources in shaping firm strategy in an extension of resource dependence theory. Using a sample of 92 regional banks for the period 1997-2004 in Japan, this paper explores the effect of amakudari (translated as the appointment of former bureaucrats to the boards of directors of private organizations) on the performance and managerial risk-taking of banks. We found that amakudari networks have a negative impact on a bank’s profitability in the post-bubble crisis era when firm-specific and other variables are controlled. In addition, the evidence shows that a bank appointing more ex-bureaucrats to its board of directors has a tendency to get involved in more risky lending activities. Furthermore, the empirical results of this study are also found to be robust using the Arellano-Bond GMM estimator.

Item Type: Article
Schools and Departments: Brighton and Sussex Medical School > Brighton and Sussex Medical School
Subjects: H Social Sciences > HG Finance
H Social Sciences > HG Finance > HG1501 Banking > HG2397 By region or country
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Depositing User: Norifumi Kawai
Date Deposited: 07 Aug 2012 09:17
Last Modified: 08 Mar 2017 06:33
URI: http://sro.sussex.ac.uk/id/eprint/40240

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