Local finance-growth nexus: Does bank ownership matter?

This paper examines the effects of the ownership form of banks on the finance-growth nexus in Japan. If the cooperative ownership of banks has comparative advantages in local financial development, the failure of a cooperative bank should be more harmful than that of a commercial bank. The evidence in this paper, however, provokes skepticism to this view, suggesting less efficient operation of some cooperative banks in local communities probably due to weak mechanisms for management discipline.