Handbook of Research on IPOs
Show Less

Handbook of Research on IPOs

Edited by Mario Levis and Silvio Vismara

The Handbook of Research on IPOs provides a comprehensive review of the emerging trends and directions in the global initial public offerings (IPO) markets. The empirical evidence included in the book covers Europe, the US and the Far East, and presents a truly global perspective of IPO markets around the world and at the different stages of the entire IPO process.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 24: How bank health affects the capital structure and performance of IPO firms: evidence from the Japanese financial crisis in the 1990s

Kazuo Yamada


The effect of the propagation of liquidity shocks through the bank–firm lending relationship is one of the central topics in banking research. For example, it is known that a negative shock on the banks leads to increases in the interest rate to their client firms(Kang and Stulz, 2000) that may have a negative impact on the investment activities and subsequent performance of the lender (Gibson, 1995). However, little is known about whether the bank’s health affects the behavior of lending firms who have a close relationship with the unhealthy bank. If a firm and a bank have a close relationship and it is difficult for the firm to change to another bank, this gives the bank the advantage of being able to require a higher interest rate from the firm or of lending more to the firm. Although in the short term the over-lending increases the revenue of the bank, in the long term, it may harm the source of the profit. The over-lending pushes up the cost of capital because of the increasing default cost and the fact that paying extra interest rates reduces the cash flow of the firm. Furthermore, the reduction of cash flow may cause firms to have insufficient equity capital after the IPOs and may lead to an increase in the cost of capital.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.