Related Lending and Bank Performance: Evidence from Indonesia

After the Asian financial crisis of 1997, it was confirmed that banks lend to their related parties in many countries. The question examined in this article is whether related lending functions to alleviate the problems of asymmetric information or transfers profits from depositors and minority shareholders to related parties. The effects of related lending on the profitability and risk of banks in Indonesia are examined using panel data from 1994 to 2007 comprising a total of 74 Indonesian banks. The effects on return on asset (ROA) varied at different periods. Before and right after the crisis, a higher credit allocation to related parties increased ROA. In middle of the crisis, it turned to negative; and this has also been the case in the most recent period as the Indonesian economy has normalized. Effects of related lending on bank risk measured by the Z-score and non-performing loan is not clear. After undergoing bank restructuring, related lending has decreased and the profit structure of banks has changed.Banks, Loans, Industrial management, Indonesia

Essays On Financial Economics

This thesis is a collection of four essays in financial economics.;The first essay develops an information-based banking model to examine the choice by lenders between negotiated debt transactions and open-market transactions when the loan market is subject to adverse selection. Due to the borrowers\u27 reputation generated through repeated financial transactions, the model exhibits dynamics of adverse selection, which, in turn, induces the movement towards securitization. The paper also studies how altering the information structure between banks and borrowers affects the dynamics of bank-loan relationships and lending rates.;The second essay applies a version of the information-based banking model developed in the first essay to examine the role of financial deepening in the context of a dynamic model. In the essay, financial deepening is interpreted in two ways: (1) a decrease in the resources spent on negotiation over terms of financial transactions, and (2) the evolution of credit markets from those with substantial degree of adverse selection to those with no adverse selection. The effect of those changes on the rate of growth is studied. It is also shown that some economic policies which affect the bargaining position of the bank may enhance the growth rate.;The third essay attempts to show that the existence of a loan sales market enables the deposit insurance corporation to implement risk-adjusted insurance premiums to banks. In the essay, the exact riskiness of the banks is private information which cannot be observed by the deposit insurance corporation. It is shown that the advent of a loan sales market induces the banks to voluntarily reveal their riskiness, and, hence, resolves the adverse selection problem between the deposit insurance corporation and banks.;The fourth essay develops a life-cycle model of corporate finance where a variety of ages of borrowers coexist to show that higher default rates in financial markets need not be associated with lower social welfare measured by the level of production by the lenders and the borrowers. The essay demonstrates that, when the brokerage fee charged by securities companies decreases, the default rate in the bond market as well as the one among the borrowers who raise funds through banks rises while the social welfare increases

Related Lending and Bank Performance: Evidence from Indonesia

After the Asian financial crisis of 1997, it was confirmed that banks lend to their related parties in many countries. The question examined in this article is whether related lending functions to alleviate the problems of asymmetric information or transfers profits from depositors and minority shareholders to related parties. The effects of related lending on the profitability and risk of banks in Indonesia are examined using panel data from 1994 to 2007 comprising a total of 74 Indonesian banks. The effects on return on asset (ROA) varied at different periods. Before and right after the crisis, a higher credit allocation to related parties increased ROA. In middle of the crisis, it turned to negative; and this has also been the case in the most recent period as the Indonesian economy has normalized. Effects of related lending on bank risk measured by the Z-score and non-performing loan is not clear. After undergoing bank restructuring, related lending has decreased and the profit structure of banks has changed

On Galloping Oscillation of Square Prism in Two Dimensional Uniform Flow

In the connection of frequently used structural members of longspanned bridges, the aeroelastic characteristics of a square prism are investigated, based on the quasi-steady theory. The experimental results of the wind tunnel tests are compared with the theoretical characteristics, using the theory given by G. V. Parkinson. In this paper, some considerations on the critical wind velocity for galloping phenomenon of square prism are presented. Also, the qualitataive method to determine the induced amplitude is discussed

Hepatocellular Carcinoma with Foamy Histiocyte-Like Appearance: A Deceptively Clear Cell Carcinoma Appearing Variant

Hepatocellular carcinoma (HCC) shows many pathological features, and it varies architecturally and cytologically. There have been many reports and discussions of the morphological features of HCC. A 63-year-old man was found to have a solitary tumor in liver segment 7 that was diagnosed as HCC. A partial resection of liver segment 7 was performed. Microscopically, the tumor lesion showed a moderately differentiated HCC. There was also a lesion with foamy histiocyte-like cells corresponding to the white lesion in the face of the cut tumor. Immunohistochemical staining showed that they were negative for CD68, S-100, vimentin, and HMB-45. The cytoplasm itself was negative on periodic acid Schiff (PAS) and Sudan staining. Without immunohistological analysis, it is difficult to distinguish this HCC variant from clear cell carcinoma or metastases of renal cell carcinoma. It is important to recognize this type as a specific cytological variant of HCC that requires confirmation by immunohistochemistry. This report describes the case of a patient with a morphologically distinctive pattern of HCC with prominent cell cytoplasm that had a foamy histiocyte-like appearance. To the best of our knowledge, this is the first report of this HCC variant

MOIRCS Deep Survey. VII: NIR Morphologies of Star-forming Galaxies at Redshift z~1

We investigate rest-frame near-infrared (NIR) morphologies of a sample of 139 galaxies with M_{s} >= 1 x 10^{10} M_{sun} at z=0.8-1.2 in the GOODS-North field using our deep NIR imaging data (MOIRCS Deep Survey, MODS). We focus on Luminous Infrared Galaxies (LIRGs), which dominate high star formation rate (SFR) density at z~1, in the sample identified by cross-correlating with the Spitzer/MIPS 24um source catalog. We perform two-dimensional light profile fitting of the z~1 galaxies in the Ks-band (rest-frame J-band) with a single component Sersic model. We find that at z~1, ~90% of LIRGs have low Sersic indices (n<2.5, similar to disk-like galaxies) in the Ks-band, and those disk-like LIRGs consist of ~60% of the whole disk-like sample above M_{s} >= 3 x 10^{10} M_{sun}. The z~1 disk-like LIRGs are comparable or ~20% small at a maximum in size compared to local disk-like galaxies in the same stellar mass range. If we examine rest-frame UV-optical morphologies using the HST/ACS images, the rest-frame B-band sizes of the z~1 disk-like galaxies are comparable to those of the local disk-like galaxies as reported by previous studies on size evolution of disk-like galaxies in the rest-frame optical band. Measuring color gradients (galaxy sizes as a function of wavelength) of the z~1 and local disk-like galaxies, we find that the z~1 disk-like galaxies have 3-5 times steeper color gradient than the local ones. Our results indicate that (i) more than a half of relatively massive disk-like galaxies at z~1 are in violent star formation epochs observed as LIRGs, and also (ii) most of those LIRGs are constructing their fundamental disk structure vigorously. The high SFR density in the universe at z~1 may be dominated by such star formation in disk region in massive galaxies.Comment: 16 pages, 15 figures, accepted for publication in PASJ. Catalog data will be available at http://astr.tohoku.ac.jp/MODS/wiki/index.php soo

Assembly of Massive Galaxies in a High-z Protocluster

We present the results of wide-field deep JHK imaging of the SSA22 field using MOIRCS instrument equipped with Subaru telescope. The observed field is 112 arcmin^2 in area, which covers the z=3.1 protocluster characterized by the overdensities of Ly Alpha emitters (LAEs) and Ly Alpha Blobs (LABs). The 5 sigma limiting magnitude is K_{AB} = 24.3. We extract the potential protocluster members from the K-selected sample by using the multi-band photometric-redshift selection as well as the simple color cut for distant red galaxies (DRGs; J-K_{AB}>1.4). The surface number density of DRGs in our observed fields shows clear excess compared with those in the blank fields, and the location of the densest area whose projected overdensity is twice the average coincides with the large-scale density peak of LAEs. We also found that K-band counterparts with z_{phot} = 3.1 are detected for 75% (15/20) of the LABs within their Ly Alpha halo, and the 40 % (8/20) of LABs have multiple components, which gives a direct evidence of the hierarchical multiple merging in galaxy formation. The stellar mass ofLABs correlates with their luminosity, isophotal area, and the Ly Alpha velocity widths, implying that the physical scale and the dynamical motion of Ly Alpha emission are closely related to their previous star-formation activities. Highly dust-obscured galaxies such as hyper extremely red objects (HEROs; J-K_{AB}>2.1) and plausible K-band counterparts of submillimeter sources are also populated in the high density region.Comment: 21pages, accepted for publication in Astrophysical Journa

MOIRCS Deep Survey V: A Universal Relation for Stellar Mass and Surface Brightness of Galaxies

We present a universal linear correlation between the stellar mass and surface brightness (SB) of galaxies at 0.3<z<3, using a deep K-band selected catalog in the GOODS-North region. The correlation has a nearly constant slope, independent of redshift and color of galaxies in the rest-z frame. Considering unresolved compact galaxies, the tight correlation gives a lower boundary of SB for a given stellar mass; lower SB galaxies are prohibited over the boundary. The universal slope suggests that the stellar mass in galaxies was build up over their cosmic histories in a similar manner irrelevant to galaxy mass, as oppose to the scenario that massive galaxies mainly accumulated their stellar mass by major merging. In contrast, SB shows a strong dependence on redshift for a given stellar mass. It evolves as (1+z)^(-2.0~-0.8), in addition to dimming as (1+z)^4 by the cosmological expansion effect. The brightening depends on galaxy color and stellar mass. The blue population (rest-frame U-V<0), which is dominated by young and star-forming galaxies, evolves as ~(1+z)^(-0.8 +-0.3) in the rest-V band. On the other hand, the red population (U-V>0) and the massive galaxies (M_*>10^(10)M_sun) shows stronger brightening, (1+z)^(-1.5+-0.1). Based on the comparison with galaxy evolution models, we find that the phenomena are well explained by the pure luminosity evolution of galaxies out to z~3.Comment: 10 pages, 9 figures. Accepted for publication in Ap