Empirical study on bank-led rescue and shock therapy during the lost decade in Japan

点击翻译按钮获取中文摘要

In this study, I empirically examine the main banks' motive for the choice of debt forgiveness and legal protection in order to restructure their distressed clients by using data on large listed companies suffered financial distress from 1998 to 2004. The results show that closeness of long-term relationship is one of main factors to determine the bank's willingness to rescue its distressed clients while the profitability of distressed client firm is also important. Moreover, other factors including bank's stance against insolvent clients and introduction of new scheme of corporate restructuring like the Industrial Revitalization of Japan have statistically significant impacts on the choice of debt forgiveness and bankruptcy for large distressed clients.