Herd Behavior by Japanese Banks in Local Financial Markets
نویسندگان
چکیده
This paper investigates whether Japanese banks followed herd behavior in lending in local financial markets during 1980—1999. By using loan data from Japanese banks, arranged by geographical area, we find leader-follower relationships between lending behavior of different types of banks. Specifically, herding is mostly caused by local banks. Local banks follow major banks in urban cities, while local banks follow each other in regional cities. In addition, herding is more frequent in regional cities than in urban cities. On the other hand, massive herding by major banks was observed in urban cities in the late 1980s–the period of the asset-price bubble in Japan.
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