Proceedings of Annual Tokyo Business Research Conference
15 - 16 December 2014, Waseda University, Tokyo, japan, ISBN: 978-1-922069-67-2
The Number of Bank Relationships and Small Business
Bankruptcies
Yuta Ogane†
In this study, we analyze the effect that the number of firms’ correspondent financial
institutions (FIs) has on the probability of firm bankruptcy using microdata from firms
incorporated in Japan between April 2003 and January 2012. The result shows that
an increase in the number of correspondent FIs increases the probability of firm
bankruptcy, which implies that the free rider problem occurs in the financial sector;
that is, an increase in the number of correspondent FIs of a firm accelerates the free
ride of other FIs in supporting the firm. Ultimately, this decreases the level of firm
support received from FIs and, therefore, increases the probability of firm
bankruptcy.
JEL Codes: C72; D71; G21; G33; M21

I would like to thank Jiro Nemoto, Yoshiaki Ogura, Tadashi Sonoda, Kaoru Ueda, and
Nobuyoshi Yamori for their helpful comments. All remaining errors are my own responsibility.
†
Graduate School of Economics, Nagoya University, Furo-cho, Chikusa-ku, Nagoya, Aichi
464-8601, Japan E-mail address: ogane.yuta@e.mbox.nagoya-u.ac.jp