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Tetsuji Okazaki, Michiru Sawada, Interbank networks in prewar Japan: structure and implications, Industrial and Corporate Change, Volume 21, Issue 2, April 2012, Pages 463–506, https://doi.org/10.1093/icc/dtr046
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Abstract
In this article, we explore the structure and implications of interbank networks in prewar Japan, focusing on director interlocking. We find that approximately half the banks had at least one connection with another bank through director interlocking, and that a bank that had connections with other banks was less likely to fail than a bank without a network. The quality of networks also matters in the sense that the failure probability of a bank with a network was negatively associated with the profitability of the connected banks. On the other hand, there is no strong evidence of financial contagion through networks. In addition, networks of director interlocking contributed to the stabilization of the financial system through coordinating bank mergers.
