Shareholding in the Keiretsu, Japan's Financial Groups

Largest debtholders in keiretsu member companies hold more stock if the companies have high debt-to-equity ratios or have weaker collateral, greater prospects of growth, or unique aspects. All are factors associated with the agency problems of debt that stockholding by a debtholder can help to resolve. The stockholding also induces greater borrowing by these same companies, ceteris paribus.