This paper empirically investigates the governance of regional banks by city banks in Japan. The authors analyze the role of city banks as pure outside shareholders of regional banks, but also examine the role of traditional Japanese Keiretsu partners. In the process of our estimation, the effects of business-oriented partnerships and the influence of the supervisory authorities, the so-called Amakudari, are controlled. The result of our analysis is that the influence of city banks as both pure outside shareholders and traditional Japanese Keiretsu partners on the productivity of regional banks is not significant.
