TY - JOUR
T1 - The Economic Impact of Herd Behavior in the Japanese Loan Market
AU - Nakagawa, Ryuichi
AU - Oiwa, Hidekazu
AU - Takeda, Fumiko
N1 - Funding Information:
We would like to thank the editor, the anonymous reviewer, Mototsugu Fukushige, Katsumi Matsuura, Fumiharu Mieno, Lijia Mo, Kazumitsu Nawata, Eiji Ogawa, Yoshiaki Ogura, Yoshiro Tsutsui, Hirofumi Uchida, Peng Xu, Naoyuki Yoshino, and other participants at “Frontiers of Financial and Behavioral Research” Conference (Ritsumeikan University Research Center for Finance & Monetary Economics Workshop, March 25, 2010), the Japan Society of Monetary Economics 2010 Spring Meeting (Tokyo, May 15, 2010), the Western Economic Association International 85th Annual Conference (Portland, Oregon, USA, June 30, 2010) and the Asia-Pacific Economic Association Annual Conference (Hong Kong, July 8, 2010) for their helpful comments and suggestions. Ryuichi Nakagawa gracefully acknowledges financial support from Nomura Foundation for Academic Promotion and KAKENHI (No. 20730139). All remaining errors are our own.
PY - 2012/9
Y1 - 2012/9
N2 - This paper investigates whether inefficient herd behavior of Japanese financial institutions in the domestic loan market affected the real economy during the period between 1975 and 1999. By using Japanese loan data, arranged by geographical area, we show that loans stemming from inefficient herd behavior of Japanese financial institutions tended to have destabilizing effects on the GDP and land prices in the following years, while ordinary loans of those financial institutions had a more positive impact. Our results indicate that the deterioration of the real economy in the 1990s may have been attributable partly to the inefficient herd behavior in the Japanese loan market during the period of the economic bubble in the late 1980s.
AB - This paper investigates whether inefficient herd behavior of Japanese financial institutions in the domestic loan market affected the real economy during the period between 1975 and 1999. By using Japanese loan data, arranged by geographical area, we show that loans stemming from inefficient herd behavior of Japanese financial institutions tended to have destabilizing effects on the GDP and land prices in the following years, while ordinary loans of those financial institutions had a more positive impact. Our results indicate that the deterioration of the real economy in the 1990s may have been attributable partly to the inefficient herd behavior in the Japanese loan market during the period of the economic bubble in the late 1980s.
KW - Economic bubble
KW - Financial institutions
KW - Herd behavior
KW - Loan market
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U2 - 10.1016/j.pacfin.2012.01.002
DO - 10.1016/j.pacfin.2012.01.002
M3 - Article
AN - SCOPUS:84857600306
SN - 0927-538X
VL - 20
SP - 600
EP - 613
JO - Pacific Basin Finance Journal
JF - Pacific Basin Finance Journal
IS - 4
ER -