Debt disorganization in Japan

Keiichiro Kobayashi, Masaru Inaba

研究成果: Article査読

5 被引用数 (Scopus)

抄録

Business transactions shrank in the early 1990s in Japan, and banks rolled over significant amounts of non-performing loans to keep non-viable firms afloat. Why did firms became inactive even though banks continued providing loans? In order to solve this problem, we focus on the nature of debt contracts as a commitment device. By rolling over bad loans, the banks might have destroyed (unintentionally) the trustworthiness of the commitments of the debtors, thereby breeding distrust among firms. The rise of distrust could then have disorganized chains of productions. We conducted an empirical analysis to check this hypothesis. Our empirical results are supportive of this line of thinking, suggesting that the Japanese economy might have suffered from disorganization due to the rollover of bad debts.

本文言語English
ページ(範囲)151-169
ページ数19
ジャーナルJapan and The World Economy
17
2
DOI
出版ステータスPublished - 2005 4 1

ASJC Scopus subject areas

  • 財務
  • 経済学、計量経済学
  • 政治学と国際関係論

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