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Stock prices and bank lending behavior in Japan

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  • Sun Bae Kim
  • Ramon Moreno

Abstract

This study attempts to shed light on whether stock price movements have contributed to recent fluctuations in bank lending in Japan by examining the historical relationship between stock prices and bank lending in that country. It is found that prior to the mid-1980s the relationship between stock prices and bank lending was weak, but subsequently strengthened considerable. This coincided with a change in the regulatory environment that encouraged banking institutions to pay more attention to their capital positions. Since the late 1980s, fluctuations in stock prices appear to have made important contributions to fluctuations in bank lending in Japan.

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Bibliographic Info

Article provided by Federal Reserve Bank of San Francisco in its journal FRBSF Economic Letter.

Volume (Year): (1994)
Issue (Month): feb11 ()
Pages:

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Handle: RePEc:fip:fedfel:y:1994:i:feb11:n:94-06

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Keywords: Stock - Prices - Japan ; Japan ; Bank loans ; Banks and banking - Japan;

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References

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  1. Peek, Joe & Rosengren, Eric, 1995. "Bank regulation and the credit crunch," Journal of Banking & Finance, Elsevier, Elsevier, vol. 19(3-4), pages 679-692, June.
  2. Lichtenberg, Frank R. & Pushner, George M., 1994. "Ownership structure and corporate performance in Japan," Japan and the World Economy, Elsevier, Elsevier, vol. 6(3), pages 239-261, October.
  3. Ramon Moreno & Sun Bae Kim, 1993. "Money, interest rates and economic activity: stylized facts for Japan," Economic Review, Federal Reserve Bank of San Francisco, pages 12-24.
  4. Frederick T. Furlong, 1992. "Capital regulation and bank lending," Economic Review, Federal Reserve Bank of San Francisco, pages 23-33.
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Cited by:
  1. Daniel E. Nolle & Rama Seth, 1996. "Do banks follow their customers abroad?," Research Paper 9620, Federal Reserve Bank of New York.
  2. Donsyah Yudistira, 2002. "The Impact of Bank Capital Requirements in Indonesia," Finance, EconWPA 0212002, EconWPA, revised 18 May 2003.
  3. Chiuri, Maria Concetta & Ferri, Giovanni & Majnoni, Giovanni, 2001. "The macroeconomic impact of bank capital requirements in emerging economies - past evidence to assess the future," Policy Research Working Paper Series 2605, The World Bank.
  4. Joe Peek & Eric S. Rosengren, 1996. "The international transmission of financial shocks: the case of Japan," Working Papers, Federal Reserve Bank of Boston 96-1, Federal Reserve Bank of Boston.
  5. Allan D. Brunner & Steven B. Kamin, 1995. "Bank lending and economic activity in Japan: did "financial factors" contribute to the recent downturn?," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 513, Board of Governors of the Federal Reserve System (U.S.).
  6. Takatoshi Ito & Yuri Nagataki Sasaki, 1998. "Impacts of the Basle Capital Standard on Japanese Banks' Behavior," Discussion Paper Series, Institute of Economic Research, Hitotsubashi University a356, Institute of Economic Research, Hitotsubashi University.
  7. Affinito, Massimiliano & Tagliaferri, Edoardo, 2010. "Why do (or did?) banks securitize their loans? Evidence from Italy," Journal of Financial Stability, Elsevier, Elsevier, vol. 6(4), pages 189-202, December.
  8. Michael Frömmel & Torsten Schmidt, 2006. "Bank Lending and Asset Prices in the Euro Area," RWI Discussion Papers, Rheinisch-Westfälisches Institut für Wirtschaftsforschung 0042, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  9. Massimiliano Affinito & Edoardo Tagliaferri, 2010. "Why do (or did?) banks securitize their loans? Evidence from Italy," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 741, Bank of Italy, Economic Research and International Relations Area.
  10. Mansor H. Ibrahim, 2006. "Stock prices and bank loan dynamics in a developing country: The case of Malaysia," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 71-89, May.
  11. Chakraborty, Suparna & Allen, Linda, 2007. "Revisiting the Level Playing Field: International Lending Responses to Divergences in Japanese Bank Capital Regulations from the Basel Accord," MPRA Paper 1805, University Library of Munich, Germany.
  12. Shrieves, Ronald E. & Dahl, Drew, 2003. "Discretionary accounting and the behavior of Japanese banks under financial duress," Journal of Banking & Finance, Elsevier, Elsevier, vol. 27(7), pages 1219-1243, July.

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