Regional Disparities in Japanese Banking Performance

Authors: Miyakoshi T.¹; Tsukuda Y.²

Source: Review Of Urban & Regional Development Studies, Volume 16, Number 1, March 2004 , pp. 74-89(16)

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Abstract:

This paper investigates whether technical inefficiency in production in the Japanese banking industry exhibits regional disparities by using the stochastic frontier model and data from the fiscal year 1999. First, we find evidence of regional disparities in technical inefficiency. Second, we find that regional disparities in technical inefficiency explain some of the disparities in regional income growth. Recent collapse of the regional banking systems in Japan was responsible for regional economic slumps. Third, we find that strong competition among banks and educational improvement by banks lead to improvements in banking performance. Finally, we find that the Merger Promotion Act currently in operation in Japan undermines recovery policies for regional banking.

Document Type: Research article

DOI: http://dx.doi.org/10.1111/j.1467-940X.2004.00081.x

Affiliations: 1: Institute of Policy and Planning Sciences, University of Tsukuba, Tsukuba, Japan 2: Graduate School of Economics, Tohoku University, Sendai, Japan

Publication date: 2004-03-01