Operating Leases and Credit Assessments: The Role of Main Banks in Japan-Reference-Cited by-同舟云学术

Operating Leases and Credit Assessments: The Role of Main Banks in Japan

Published:2022-04-22 Issue:2 Volume:21 Page:101-123
ISSN:1558-8025
Container-title:Journal of International Accounting Research
language:en
Short-container-title:

Author:

Koga Yuya¹^ORCID,Saudagaran Shahrokh M.²

Affiliation:

1. Tohoku Gakuin University

2. University of Washington Tacoma

Abstract

ABSTRACT This study examines how Japanese banks evaluate off-balance sheet operating leases in their credit assessments. Using a sample of 6,985 firm-year observations in Japan over the period 2001 to 2017, we find that banks in Japan evaluate off-balance sheet operating leases in certain circumstances. First, we find that banks evaluate such leases when firms have a strong relationship with a main bank. Second, banks assess firms' credit risk by evaluating operating leases if there is a strong main bank relationship especially when estimation reliability is low. We uncover robust results by controlling for the systematic characteristics of a strong main bank relationship. Our study thus suggests that the main bank relationship plays the important role of conveying the off-balance sheet operating leases in loan contracts in Japan.

Funder

Japan Society for the Promotion of Science

Publisher

American Accounting Association

Subject

Accounting,Business and International Management

Link

https://publications.aaahq.org/jiar/article-pdf/21/2/101/82671/i1558-8025-21-2-101.pdf

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