"This paper empirically investigates the determinants of subordinated debt issuance by Japanese regional banks during the period 2000-2005 using a probit model. The empirical results suggest the following: (i) Throughout the period, Japanese regional banks with a lower capital/asset ratio have...

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Bibliographic Details

Main Authors:	Baba, Naohiko (Author), Inada, Masakazu (Author), Maeda, Yasuo (Author)
Format:	Book
Language:	English
Published:	Tokyo IMES 2007
Series:	Discussion paper series / Institute for Monetary and Economic Studies, Bank of Japan 2007,3
Subjects:	subordinated debt; Japanese banks; Basel Accord; market discipline; non-performing loan problem Bank loans > Japan Banks and banking, Japanese Subordination agreements (Finance) > Japan
Online Access:	Volltext
Summary:	"This paper empirically investigates the determinants of subordinated debt issuance by Japanese regional banks during the period 2000-2005 using a probit model. The empirical results suggest the following: (i) Throughout the period, Japanese regional banks with a lower capital/asset ratio have a higher incentive to issue subordinated debts because they are counted as Tier 2 capital under the Basel Accord. (ii) During the period of instability in the Japanese banking system (2000-2003), investors tended to intensively use financial variables such as the non-performing loan ratio, ROA, and total deposits outstanding to screen good banks for their investments in the subordinated debts. (iii) During the period after the banking system regained stability (2004-2005), investors tended to pay less attention to the above variables due mainly to the mitigated default risk of these banks."--Authors' abstract
Physical Description:	19 S.