Importance of Regional Financial Institutions in Regional Economic Development: Based on the Results of Corporate Surveys in Japan's Tokai and Kansai Regions

23 Pages Posted: 11 Sep 2009

See all articles by Nobuyoshi Yamori

Nobuyoshi Yamori

Kobe University - Research Institute for Economics & Business Administration

Date Written: September 1, 2008

Abstract

This paper has analyzed the relationship between medium / small firms and financial institutions based on the results of questionnaires prepared for medium / small firms in the Tokai and Kansai regions. With the development of telecommunication technology and progress in securities market infrastructure, there are fewer cases in which geographical distance poses a problem in financial transactions. However, financing for medium/small firms is expected to remain dependent on indirect finance, i.e., financing through their major trading bank, inasmuch as it will be necessary for financial institutions to play a major role in overcoming the problem of information asymmetry in that sector. More specifically, this type of relationship banking in which periodical and direct contact lends to increased company knowledge is thriving as a means to eliminate the issue of information asymmetry. The direct contact or communication, an integral part of relationship banking entail costs, and can become difficult when banks locate far from firms.

Keywords: regional finance, Japan, bank, SME finance

JEL Classification: G21

Suggested Citation

Yamori, Nobuyoshi, Importance of Regional Financial Institutions in Regional Economic Development: Based on the Results of Corporate Surveys in Japan's Tokai and Kansai Regions (September 1, 2008). Available at SSRN: https://ssrn.com/abstract=1471303 or http://dx.doi.org/10.2139/ssrn.1471303

Nobuyoshi Yamori (Contact Author)

Kobe University - Research Institute for Economics & Business Administration ( email )

2-1, Rokkodai cho
Nada-ku
Kobe, 657-8501
Japan

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