Constructing a strong and unique instrument for bank capital from the empirical observation of Japanese banks’ past behavioral changes, we identify the impact of capital adequacy on the allocation of bank lending supply across low quality and high quality borrowers. We find that, in FY 1997, a...

In this paper, we report the findings from an interview survey on the system and process of lending decisions and loan pricing, as well as the information that is used in such processes. The survey targeted 19 regional financial institutions, including regional banks and cooperative institutions...

This paper is an empirical examination of the existence of the inside bank premium arising from relationship banking, which is predicted in the extant theoretical models. These models predict that the contracted interest rate of a loan extended by an inside bank when there exist asymmetries...