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Keiretsu and risk: An examination of the risk exposure of keiretsu banks in Japan

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Abstract

We compare risk positions adopted by keiretsu and non-keiretsu banks in Japan and examine how the risk positions of Japanese banks changed following the conclusion in 1997 of an escalating series of banking crises in Japan and East-Asia. The results indicate that keiretsu banks take less risk than non-keiretsu banks, and that Japanese banks in general adopted lower risk profiles after 1997. Japanese bank risk is positively associated with the ratio of non-performing loans to capital, interest rates, and private investment in residential construction, and negatively with the ratio of administrative expenses to average assets and the money supply

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  1. Department of Economics, School of Business, State University of New York-Fredonia, 14063, Fredonia, NY

    Rungrudee Suetorsak

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Suetorsak, R. Keiretsu and risk: An examination of the risk exposure of keiretsu banks in Japan. J Econ Finan 31, 268–282 (2007). https://doi.org/10.1007/BF02751647

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