A COMPARATIVE ANALYSIS OF THE CONTROL POWER OF BANKS IN CORPORATE GROUPINGS IN JAPAN AND GERMANY --- AN ANALYSIS OF THE CO-DETERMINATION SYSTEM BASED ON PRINCIPAL-AGENT-THEORY

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It is well known that the banking system in Germany is very unique and different from that in an. The system in Germany is very famous as the "universal banking system", which has various merits and demerits in the economic sense or in the sense of resource allocation. When banks try to influence or to monitor the firms in the corporate groupings (keiretsu in Japan and Konzern in Germany) , they must have some routes inside and outside the firms including three major routes. The first route is a very direct one. Banks send their officers or directors to the firms of their group and they work as the member of the board or as the officer of the group-firms. Then they can monitor whether the group-firms operate correctly and if necessary they can advise and correct the decision of the firms. The second route for the banks to influence the firms is to have the stock of them and the third is to give a long term credit to them. Anyway the banks, "main bank"in Japan and "Hausbank" in Germany, can control the group-firms through the above mentioned routes. It is, however, not clear whether the effect of the influence is beneficial for the group-firms or not. This is a typical problem which must be tested by empirical researches. Theoretically speaking, the agency cost between banks and group-firms can be reduced by the above mentioned three routes, if banks act fair, effectively and efficiently. We tried to test this relationship between banks and group firms based on the principal-agent theory. The lts are not always homogenous in Japan. The degree of bank's influence on the group-firms may be different among the periods of the empirical research and the role of the banks is said to have become weaker after the breakdown of the bubble-economies. It would be necessary to examine the results of empirical research further to have a general conclusion to judge the relationship.