Bank monitoring and the maturity structure of Japanese corporate debt issues
Author(s)
Author(s)
Cai, J.
Goyal, V. K.
Date Issued
1999
Publisher
Elsevier
Journal
Pacific-Basin Finance Journal
Volume
7
Issue
3-4
Start page
229
End page
250
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.
SFU Affiliated Publication
No
Availability at SFU Library
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