Monitoring the Monitors: Amakudari and the Ex-Post Monitoring of Private Banks

CEPR Discussion Paper Series Number 1785

Posted: 26 Jun 1998

See all articles by Adrian A. R. J. M. van Rixtel

Adrian A. R. J. M. van Rixtel

European Central Bank (ECB)

Wolter H.J. Hassink

Utrecht University - Department of General Social Sciences; IZA Institute of Labor Economics

Date Written: January 1998

Abstract

The paper investigates whether the Japanese monetary authorities use post-retirement employment of Ministry of Finance (MoF) and Bank of Japan (BoJ) officials as a policy instrument. The authors also investigate whether industrial groupings (keiretsu) and main banks have monitoring functions. They find that MoF and BoJ retirees do move into banks that perform badly in terms of profitability. Furthermore, the paper concludes that the movement of these retirees into the boards of private banks is positively related to specific main bank relationships. The hypothesis of monitoring by keiretsu is rejected, however. Finally, the paper finds that MoF/BoJ amakudari appointments have a positive impact on the development of lending to risky industries. In particular, this latter finding casts doubts on the credibility of the hypothesis that amakudari is used as an instrument of prudential policy.

JEL Classification: E58, G30, G38

Suggested Citation

van Rixtel, Adrian A.R.J.M. and Hassink, Wolter H.J., Monitoring the Monitors: Amakudari and the Ex-Post Monitoring of Private Banks (January 1998). CEPR Discussion Paper Series Number 1785, Available at SSRN: https://ssrn.com/abstract=102128

Adrian A.R.J.M. van Rixtel (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Wolter H.J. Hassink

Utrecht University - Department of General Social Sciences ( email )

Algemene Sociale Wetenschappen
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3508 TC Utrecht
Netherlands
+31 30 2531115 (Phone)
+31 30 2533992 (Fax)

IZA Institute of Labor Economics

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Germany

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