"The Fable of the Keiretsu"
BY: YOSHIRO MIWA
University of Tokyo
J. MARK RAMSEYER
Harvard Law School
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Paper ID: Harvard Law and Economics Discussion Paper No. 316
Date: March 2001
Contact: YOSHIRO MIWA
Email: Mailto:miwa at e.u-tokyo.ac.jp
Postal: University of Tokyo
7-3-1 Hongo, Bunkyo-ku
Tokyo 113-0033, JAPAN
Phone: 011-81-3-5841-5530
Fax: 011-81-3-5841-5521
Co-Auth: J. MARK RAMSEYER
Email: Mailto:ramseyer at law.harvard.edu
Postal: Harvard Law School
Cambridge, MA 02138 USA
Paper Requests:
Contact Karl Coleman, John M. Olin Center for Law, Economics,
and Business at Harvard Law School, Hauser 506, Cambridge, MA
02138. Mailto:kcoleman at law.harvard.edu Phone:(617)496-1670.
Fax:(617) 496-2256.
ABSTRACT:
Central to so many accounts of post-war Japan, the keiretsu
corporate groups have never had economic substance. Conceived by
Marxists committed to locating "domination" by "monopoly
capital," they found an early audience among western scholars
searching for evidence of culture-specific group behavior in
Japan. By the 1990s, they had moved into mainstream economic
studies, and keiretsu dummies appeared in virtually all
econometric regressions of Japanese industrial or corporate
structure. Yet the keiretsu began as a figment of the academic
imagination, and they remain that today.
The most commonly used keiretsu roster first groups large
financial institutions by their pre-war antecedents. It then
assigns firms to a group if the sum of its loans from those
institutions exceeds the amount it borrows from the next largest
lender. Other rosters start by asking whether firm presidents
meet occasionally with other presidents for lunch. Regardless of
the definition used, cross-shareholdings were trivial even
during the years when keiretsu ties were supposedly strongest,
and membership has only badly proxied for "main bank" ties.
Econometric studies basing "keiretsu dummies" on these rosters
have produced predictably haphazard results: some are a function
of misspecified equations, while others depend on outlying data
points and some are specific to one keiretsu roster but not
others. The only reliably robust results are the artifacts of
the sample biases created by the definitions themselves.