Since 2003, the Financial Services Agency (FSA) has set relationship banking enhancement program as an important strategic task to improve the functions of regional financial institutions. In this enhancement program, the FSA recommended that regional financial institutions introduce new...

The letter discusses the contagion effect of the first bank liquidation in Japan. Performing the traditional t-test and Corrado's non-parametric rank test, it is found that the effects of the liquidation were concentrated only on banks that resembled the failing bank.