Table 2: Factors that Affected Profitability of Firms in Hokkaido after the HTB Failure (Estimated Selection Corrected Profitability Equation)

Dependent variable:Profit / Capital(After the HTB Failure)	[1]	[2]
Until 1998.10	Until 2000.10	Until 1998.10	Until 2000.10
HTB Main Bank Dummy (1996)	-1.095	-3.655	0.599	0.730
(2.817)	(2.727)	(3.289)	(3.168)
HTB Client Dummy (1996)	2.213	0.435	5.956 **	2.343
(2.436)	(2.362)	(2.614)	(2.528)
HTB Main x C/D Rating Dummy	-21.992 *	-29.195 **
(12.499)	(12.353)
HTB Client x C/D Rating Dummy	-2.671	-0.574
(7.516)	(7.472)
HTB Main x NPB non-Main Dummy	-7.745	-13.397 ***
(4.965)	(4.811)
HTB Client x NPB non-Client Dummy	-15.827 ***	-7.805 **
(3.918)	(3.871)
Profit / Capital * 100 (before the HTB Failure)	0.564 ***	0.516 ***	0.563 ***	0.516 ***
(0.010)	(0.009)	(0.010)	(0.009)
Sales Growth (from before to after)	0.833 ***	0.888 ***	0.827 ***	0.882 ***
(0.048)	(0.044)	(0.048)	(0.044)
log of the Number of Employees (1996)	0.025	4.006 ***	0.128	3.952 ***
(1.207)	(1.171)	(1.208)	(1.171)
log of Years from its Establishment (1996)	3.041	-0.801	2.624	-0.914
(1.973)	(1.922)	(1.972)	(1.921)
A Rating Dummy (1996)	9.999 ***	24.298 ***	7.672 **	22.520 ***
(3.469)	(3.416)	(3.548)	(3.488)
B Rating Dummy (1996)	-0.339	4.511	-1.732	3.348
(2.817)	(2.741)	(2.839)	(2.797)
Selection equation:HTB Main Bank Dummy (1996)	-0.048	-0.008	-0.047	-0.011
(0.084)	(0.065)	(0.084)	(0.065)
HTB Client Dummy (1996)	0.113 *	0.107 **	0.111	0.107 **
(0.068)	(0.051)	(0.068)	(0.051)
log of the Number of Employees (1996)	-0.095 ***	-0.048 **	-0.095 ***	-0.048 **
(0.034)	(0.027)	(0.034)	(0.026)
log of Years from its Establishment (1996)	0.127 **	0.136 ***	0.131 ***	0.136 ***
(0.050)	(0.039)	(0.050)	(0.039)
Profit / Capital * 100 (1995)	0.001 ***	0.002 ***	0.001 ***	0.002 ***
(0.0003)	(0.0002)	(0.0003)	(0.0002)
A Rating Dummy (1996)	0.935 ***	1.027 ***	0.931 ***	1.027 ***
(0.104)	(0.079)	(0.104)	(0.079)
B Rating Dummy (1996)	0.486 ***	0.548 ***	0.482 ***	0.547 ***
(0.066)	(0.050)	(0.066)	(0.050)
p	0.105	0.223	0.106	0.225
(0.037)	(0.036)	(0.037)	(0.037)
LR test of indep. eqns. p = 0 ) chi2(1)	4.150 **	18.810 ***	4.030 **	19.000 ***
Log likelihood	-61,193	-60,667	-61,178	-60,655
Number of obs	10,195	10,348	10,195	10,348
Censored obs	247	566	247	566
Uncensored obs	9,948	9,782	9,948	9,782

Notes: Figures in the parentheses are standard errors. *** Significant at the 1% level. ** Significant at the 5% level. * Significant at the 10% level.

Coefficients of these sample selection models are estimated by maximum likelihood. All regressions also include area dummies, industry dummies and a constant term. Construction of variables in the regressions are as follows.

Profitability $ P_{i}^{a} $ until 1998.10 is defined as the ratio of after-tax profit to capital calculated on the financial statements for the settlement year that closed between November 1997 and October 1998. Profitability $ P_{i}^{a} $ until 2000.10 is defined as the ratio of averaged after-tax profit to averaged capital for the three settlement years until 2000. The HTB Main Bank Dummy and the HTB Client Dummy are constructed on the bank list in the HSR 1996 edition. Two binary variables for the crossing dummies, i.e., the C/D Rating Dummy and the NPB non-Main Dummy, are constructed on the TSR credit rating in the HSR 1998 edition, which reports the findings of TSR survey during the period from January 1997 to December 1997, and the bank list in the HSR 2000 edition, respectively.

Profitability before the HTB failure is defined as the ratio of averaged after-tax profit to averaged capital for the three settlement years until October 1997. Profitability variable selection equation is defined as the ratio of after-tax profit to capital calculated on the financial statements for the settlement year that closed between November 1994 and October Sales growth is defined as the growth from the three year average sales before the failure to the sales of the year immediately after the failure or to the three year average sales a the failure. Number of Employees, Years from its Establishment and TSR Credit Ratings are from the HSR 1996 edition.