For Western economists and journalists, the most distinctive facet of the post-war Japanese business world has been the keiretsu, or the insular business alliances among powerful corporations. Within keiretsu groups, argue these observers, firms preferentially trade, lend money, take and receive...

Observers of modern transitional economies urge firms there to ignore stock markets. Stock markets simply will not work in such environments, they explain. Firms should instead rely on debt finance, particularly bank debt. Only then will they be able to keep principal-agent (i.e.,...

Economists and legal scholars routinely posit an implicit contract between Japanese firms and their principal lender (called their "main bank"). Under this arrangement, the bank implicitly agrees to rescue the firm (through financial and managerial help) when times turn bad. Out of court, it...

Prepared for a forthcoming book on the distribution sector in Japan, this essay introduces the distribution network in the apparel industry. We note the varying patterns of cross-market contracting and intra-firm organization in the industry, and trace the economizing logic involved. More...

The Japanese quot;main bank systemquot; figures prominently in the recent literature on quot;relationship banking.quot; By most accounts, the main bank epitomizes relationship finance: traditionally, every large Japanese firm had one, and that bank monitored the firm, participated in its...

Although some observers urge modern transitional economies to rely on bank finance rather than stock markets, in quot;transitionalquot; Japan at the opening of the 20th century large firms did not rely on debt. Instead, they raised their funds through the stock market, and took a variety of...

Several decades ago, Gerschenkron famously argued that banks facilitate economic growth in quot;backwardquot; countries. To similar effect, theorists sometime claim that banks promote growth by reducing informational asymmetries and thereby improving the allocation of funds. As a fast-growth but...

Reformists argue that Japanese firms maintain inefficiently few outside directors, while theory suggests market competition should drive firms toward their firm - specifically optimal board structure (if any). The debate suggests three testable hypotheses. First, perhaps board composition does...

In 1985, Demsetz amp; Lehn argued both that the optimal corporate ownership structure was firm-specific, and that market competition would drive firms toward that optimum. Because ownership was endogenous to expected performance, they cautioned, any regression of profitability on ownership...