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Reciprocity and Network Coordination: Evidence from Japanese Banks

Zekeriya Eser; Joe Peek

Title:
Reciprocity and Network Coordination: Evidence from Japanese Banks
Author(s):
Eser, Zekeriya
Peek, Joe
Date:
Type:
Working papers
Department:
Center on Japanese Economy and Business
Permanent URL:
Series:
Center on Japanese Economy and Business Working Papers
Part Number:
245
Publisher:
Center on Japanese Economy and Business, Graduate School of Business, Columbia University
Publisher Location:
New York
Abstract:
In this study, we provide the first detailed empirical evidence on the cooperative behavior of individual members of a functioning, real world network. In contrast to experimental evidence from limited settings, our study employs detailed data on the volume of loans given to individual firms from each individual bank that lends to them at an annual frequency for nearly 20 years. Using this detailed data, we are able to exploit substantial cross-sectional variation in the degree of reliance of the banks on the network as a whole and on other individual banks within the network. In addition, we are able to investigate the impact of economic stress on the cooperative behavior of individual network members by comparing the 1980s with the more turbulent 1990s. We find strong evidence that the strength of system-wide reliance on, and thus commitment to, the network, as well as pairwise reliance on other network members, plays an important role in explaining the observed cooperative behavior by Japanese banks.
Subject(s):
Economics, Commerce-Business
Item views:
150
Metadata:
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