The Effects of Collateral on Firm Performance

This paper examines how collateral and personal guarantees affect firms’ ex-post performance employing a propensity score matching estimation approach. Based on a unique firm-level panel data set of more than 500 small-and-medium-sized borrower firms in Japan, we find that borrowers that provide collateral to lenders experience larger increases in profitability and reductions in riskiness than borrowers that do not. The main channel through which the borrower enhances its profitability is cost-cutting restructuring. These findings are consistent with the hypothesis that collateral reduces moral hazard by providing borrowers with an incentive to enhance their creditworthiness. We find little evidence that improvements in collateralized firms’ performance are driven by the intensified monitoring on the part of lenders, or by borrowing firms’ access to larger amounts of credit.collateral, moral hazard, propensity score

Rich structural phase diagram and thermoelectric properties of layered tellurides Mo1-xNbxTe2

MoTe2 is a rare transition-metal ditelluride having two kinds of layered polytypes, hexagonal structure with trigonal prismatic Mo coordination and monoclinic structure with octahedral Mo coordination. The monoclinic distortion in the latter is caused by anisotropic metal-metal bonding. In this work, we have examined the Nb doping effect on both polytypes of MoTe2 and clarified a structural phase diagram for Mo1-xNbxTe2 containing four kinds of polytypes. A rhombohedral polytype crystallizing in polar space group has been newly identified as a high-temperature metastable phase at slightly Nb-rich composition. Considering the results of thermoelectric measurements and the first principles calculations, the Nb ion seemingly acts as a hole dopant in the rigid band scheme. On the other hand, the significant interlayer contraction upon the Nb doping, associated with the Te p-p hybridization, is confirmed especially for the monoclinic phase, which implies a shift of the p-band energy level. The origin of the metal-metal bonding in the monoclinic structure is discussed in terms of the d electron counting and the Te p-p hybridization.Comment: 16 pages, 6 figures, 1 table, to be published in APL Material

Consolidation of Cooperative Banks (Shinkin) in Japan:Motives and Consequences

We investigate the motives and consequences of the consolidation of cooperative banks (Shinkin) in Japan during the period 1984-2002. Our major findings are as follows. First, less profitable and less cost efficient banks are more likely to be an acquirer and a target, though even less profitable and less cost efficient banks are more likely to be a target rather than an acquirer. In addition, a larger bank is more likely to be an acquirer and smaller one a target. These results are consistent with the regulators' motive for stabilizing the local banking system.¡¡Second, acquiring banks improved cost efficiency after the consolidation. M&As also raised the loan interest rate and improved profitability and X-efficiency particularly since the latter half of the 1990s. Nonetheless, the improvement of ROA after the merger was not sufficient to fill in the initial gap of the capital ratio between merging banks and peers, resulting in the deterioration of the capital ratio of consolidated banks relative to peers. M&As did not contribute to sufficiently stabilize the local banking system despite the regulators' motive. Third, the consolidation tended to improve the profitability of merging banks when the difference in profitability and healthiness between acquiring banks and target banks were large, which is consistent with the relative efficiency hypothesis (e.g., Akhavein, Berger, and Humphrey, 1997).Length: 48 pages

Firm Age and the Evolution of Borrowing Costs: Evidence from Japanese Small Firms

This paper investigates how a firm's borrowing cost evolves as it ages. Using a new data set of more than 200,000 bank-dependent small firms in 1997-2002, we find the following. First, the distribution of borrowing cost tends to become less skewed to the right over time. Second, this shift of the distribution can be partially attributable to "selection" (i.e., firms with lower quality and higher borrowing costs exit from markets), but mainly explained by "adaptation" (i.e., surviving firms' borrowing costs decline as they age). Third, we find an age dependence of a firm's borrowing costs even if we control for firm size, but fails to find an age dependence of its profits volatility once we control for firm size. Empirical results suggest that age dependence of borrowing costs comes not from the Diamond's reputation-acquisition mechanism, but from bank's learning about borrower's true quality over the duration of bank-borrower relationship.