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Article

Heterogeneous effect of the global financial crisis and the Great East Japan Earthquake on costs of Japanese banks

Journal of Empirical Finance. 2017. Vol. 42. P. 66-89.

The effect of financial and economic ctarises depends on bank technology, which includes risk attitude and business model. The paper focuses on Japanese banking and examines how technology distinctions determined impact of the 2007–2009 global financial crisis and the economic recession that followed the Great East Japan Earthquake of 2011. Assuming that different types of technology correspond to different cost quantiles, we use panel data quantile regressions to establish a link between efficiency, economies of scale/scope and the effects of the two crises. The analysis reveals technological heterogeneity and shows that the impact of profitability, non-traditional activities and non-performing loans in the two crises differs between high-cost and low-cost banks. Finally, we contrast the business models and risk-taking behavior of Japanese and European banks.