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Development Bank of Japan Research Series

Utilization of Soft Information on Bank Performance

The Roles of Relationship Lending in Competitive Local Markets

Authors: Yosano, Tadanori, Nakaoka, Takayoshi

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  • Measures soft information directly by using questionnaire survey data from lender representatives who are in charge of screening and judging lending decisions
  • Finds a latent element of soft information within the borrower, which can help to give lenders a local advantage over distant lenders
  • Proposes creating networks and obtaining business/leadership information to strengthen lender–borrower relationships and thus achieve higher profitability
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  • ISBN 978-981-13-8472-1
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Softcover 51,99 €
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  • ISBN 978-981-13-8471-4
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  • Usually dispatched within 3 to 5 business days.
  • The final prices may differ from the prices shown due to specifics of VAT rules
About this book

This book explores the effects of soft information utilization in the decision process for lenders, especially concerning small and medium-sized enterprises (SMEs) in regional markets. This study is one of the first to use questionnaire survey data from lender representatives, and analyzes the relationship between the financial metrics of a lender’s performance and soft information factors in inter-bank competition. The authors’ empirical results suggest that utilizing soft information allows banks to attain a more precise lending decision.

The Financial Services Agency in Japan introduced an action program in 2003 that requires regional banks to shift from transaction banking to relationship lending. Against that background, this book examines the influence of relationship lending on a lender’s performance. This study found that relationship lending allows lenders to charge a higher premium to counteract the high risk involved with SMEs. The book also examines how relationship lending affects lending performance in inter-bank competition. The conclusion is that, even though inter-bank competition has negative effects, a bank in a competitive local market can acquire an informational advantage to limit its own loss.

This book categorizes three soft information factors: organizational systems, networks or alliances/partnerships, and business/management leadership based on survey data. The authors’ findings suggest that information production, especially network and business/leadership information, plays an essential role in promoting a bank’s profitability. These effects are strong even when banks face high inter-bank competition. Relationship lending not only improves bankers’ lending techniques, but also fosters and enhances their community knowledge and enables them to survive in a highly competitive market.

About the authors

Tadanori Yosano is associate professor at the Graduate School of Business Administration at Kobe University; and visiting scholar of the Research Institute of Capital Formation, Development Bank of Japan. His fields of interest in research are within accounting for intangibles, intellectual capital reporting, accounting for M&A, accounting for employee stock options as well as soft information role in bank-firm relationship. He received a bachelor’s degree in economics at Kyoto University in 1994 and a Ph.D. in business administration at Kobe University in 2002.

Takayoshi Nakaoka is working at Kindai University in Japan as an associate professor, and gives lectures on statistics and econometrics. His current research focuses on relationship banking, corporate cash holding, and information management in the organization. He received a Ph.D. in commerce at Kobe University in 2011, and worked as a researcher at SMBC Nikko Securities Inc.

Table of contents (5 chapters)

Table of contents (5 chapters)
  • Introduction

    Pages 1-16

    Yosano, Tadanori (et al.)

  • Theory and Hypotheses: The Effects of Using Soft Information on a Lender’s Performance, Specifically in Interbank Competition

    Pages 17-29

    Yosano, Tadanori (et al.)

  • Survey Data from Japanese Regional Banks and Using Soft Information in Lending Decisions

    Pages 31-56

    Yosano, Tadanori (et al.)

  • The Influence of Using Soft Information on Lender Performance in Competitive Local Markets: An Empirical Analysis

    Pages 57-92

    Yosano, Tadanori (et al.)

  • Soft Information’s Role in Lending Decisions

    Pages 93-105

    Yosano, Tadanori (et al.)

Buy this book

eBook 42,79 €
price for Spain (gross)
  • ISBN 978-981-13-8472-1
  • Digitally watermarked, DRM-free
  • Included format: EPUB, PDF
  • ebooks can be used on all reading devices
  • Immediate eBook download after purchase
Softcover 51,99 €
price for Spain (gross)
  • ISBN 978-981-13-8471-4
  • Free shipping for individuals worldwide
  • Immediate ebook access, if available*, with your print order
  • Usually dispatched within 3 to 5 business days.
  • The final prices may differ from the prices shown due to specifics of VAT rules
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Bibliographic Information

Bibliographic Information
Book Title
Utilization of Soft Information on Bank Performance
Book Subtitle
The Roles of Relationship Lending in Competitive Local Markets
Authors
Series Title
Development Bank of Japan Research Series
Copyright
2019
Publisher
Springer Singapore
Copyright Holder
Development Bank of Japan
eBook ISBN
978-981-13-8472-1
DOI
10.1007/978-981-13-8472-1
Softcover ISBN
978-981-13-8471-4
Series ISSN
2367-0967
Edition Number
1
Number of Pages
XI, 110
Number of Illustrations
2 b/w illustrations, 7 illustrations in colour
Topics

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