This paper investigates whether balance-sheet conditions of firms and their main banks matter for firm investment behavior using dynamic corporate panel data in Japan for the period 1985-95. It finds that smaller non-bond issuing firms were facing liquidity constraints; these firms balance-sheet conditions (the debt asset ratios) affected their investment from the midst of the bubble era by influencing mail banks lending to them; and the deterioration of their main banks balance sheet conditions constrained these firms investment from about 1993. These findings highlight the potential macroeconomic impact and importance of the credit channel of monetary policy, and support the case of a credit crunch facing small Japanese firms during this period.
Did you find this white paper useful?
24 out of 38 users found this white paper useful
Related white papers
Hire Talent From Inside or Go Outside?
One of the most fundamental choices that employers make is whether to develop talent internally by promoting from within the organization or to hire talent from the outside. Large employers,...
Make Time Adjustments to Fit Your Values
Once the user has created a personal mission statement - that is, a statement that defines what's important to the user and that helps him or her make difficult decisions...
The Home Office Deduction
The savings from an office-in-home deduction can be significant, particularly in the case of a taxpayer who is subject to both income and self-employment taxes. However, before including this deduction...
Using Documents Effectively in Court
Long before one enters the courtroom, one must spend a great deal of time preparing, formatting, and organizing the documents that one plan to use as part of the case....
Lincoln Financial Invests in Hyperion for Improved Decision Making
Lincoln Financial Group is one of the nation's leading providers of financial planning and investment advisory services. Lincoln Financial faced a growing challenge to capture and report on more line...
The Boston Beer Company Streamlines Finances With Hyperion Planning
The Boston Beer Company is America's leading brewer of world-class beer. The company needed to streamline its budgeting process, reducing the time it took sales personnel to project data and...
The Power of Alignment: How Great Organizations Stay Focused and Use Alignment Measurement to Achieve Extraordinary Results
Aligned and integrated organizations outperform their competitors by every financial measure. Alignment is not some kind of static perfection; attaining alignment is a never-ending process of correcting misalignments. This webcast...
