Herd Behaviour by Japanese Banks after Financial Deregulation

19 Pages Posted: 21 Sep 2011

See all articles by Ryuichi Nakagawa

Ryuichi Nakagawa

Kansai University - Faculty of Economics

Hirofumi Uchida

Kobe University - Graduate School of Business Administration

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Date Written: October 2011

Abstract

This paper investigates whether Japanese banks followed herd behaviour during the 1980s and 1990s. The results indicate the existence of herding during the sample period, while the inefficiency of herding is concentrated in the early to mid 1980s, the period immediately after financial deregulation began. Evidence for the inefficient herding is observed in the behaviour of banks that made loans to new borrowers, and in the behaviour of banks that followed the type of banks that were more informed on lending to new borrowers. On the other hand, inefficient herd behaviour is rarely observed in the 1990s.

Suggested Citation

Nakagawa, Ryuichi and Uchida, Hirofumi, Herd Behaviour by Japanese Banks after Financial Deregulation (October 2011). Economica, Vol. 78, Issue 312, pp. 618-636, 2011, Available at SSRN: https://ssrn.com/abstract=1930783 or http://dx.doi.org/10.1111/j.1468-0335.2010.00870.x

Ryuichi Nakagawa (Contact Author)

Kansai University - Faculty of Economics ( email )

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Hirofumi Uchida

Kobe University - Graduate School of Business Administration ( email )

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