Should Japanese Banks Be Recapitalized?
AbstractWhen a bank is a relationship lender, its financial health affects the access to credit of its borrowers. If bank regulators or uninsured private depositors might force a bank to close, it will take any action necessary to remain open. This can lead to inefficient and excessive foreclosure of the bank's relationship-based loans to viable borrowers, or alternatively to the inability to collect existing loans due to its fear of recognizing an accounting loss if a loan is called. The level of bank capital then has real effects on its borrower's access to credit. A subsidized recapitalization of banks with relationship-based loans can be a good policy. The size of the recapitalization is critical, because providing too small an amount of subsidized capital can be worse than providing no capital. Providing subsidized capital to banks without relationship-based loans is never a good policy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Institute for Monetary and Economic Studies, Bank of Japan in its journal Monetary and Economic Studies.
Volume (Year): 19 (2001)
Issue (Month): 2 (May)
Contact details of provider:
Postal: 2-1-1 Nihonbashi, Hongoku-cho, Chuo-ku, Tokyo 103
Web page: http://www.imes.boj.or.jp/
More information through EDIRC
Find related papers by JEL classification:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Kim, Yong Jin, 2008. "The role of corporate governance system in magnifying the impact of exogenous changes on the economy with self-fulfilling crises," Japan and the World Economy, Elsevier, vol. 20(4), pages 453-478, December.
- Diamond, Douglas W. & Rajan, Raghuram G., 2001.
"Banks, short-term debt and financial crises: theory, policy implications and applications,"
Carnegie-Rochester Conference Series on Public Policy,
Elsevier, vol. 54(1), pages 37-71, June.
- Douglas W. Diamond & Raghuram G. Rajan, . "Banks, Short Term Debt and Financial Crises: Theory, Policy Implications and Applications."," CRSP working papers 518, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Douglas W. Diamond & Raghuram G. Rajan, 2000. "Banks, Short Term Debt and Financial Crises: Theory, Policy Implications and Applications," NBER Working Papers 7764, National Bureau of Economic Research, Inc.
- Douglas W. Diamond & Raghuram G. Rajan, 2003.
"Liquidity Shortages and Banking Crises,"
NBER Working Papers
10071, National Bureau of Economic Research, Inc.
- Vasiliki Skreta & Thomas Philippon, 2010.
"Optimal Interventions in Markets with Adverse Selection,"
2010 Meeting Papers
1333, Society for Economic Dynamics.
- Thomas Philippon & Vasiliki Skreta, 2012. "Optimal Interventions in Markets with Adverse Selection," American Economic Review, American Economic Association, vol. 102(1), pages 1-28, February.
- Philippon, Thomas & Skreta, Vasiliki, 2010. "Optimal Interventions in Markets with Adverse Selection," CEPR Discussion Papers 7737, C.E.P.R. Discussion Papers.
- Thomas Philippon & Vasiliki Skreta, 2011. "Optimal Interventions in Markets with Adverse Selection," Working Papers 11-11, New York University, Leonard N. Stern School of Business, Department of Economics.
- Thomas Philippon & Vasiliki Skreta, 2010. "Optimal Interventions in Markets with Adverse Selection," NBER Working Papers 15785, National Bureau of Economic Research, Inc.
- Douglas W. Diamond, 2001. "Should banks be capitalized?," Economic Quarterly, Federal Reserve Bank of Richmond, issue Fall, pages 71-96.
- Uesugi, Iichiro & Sakai, Koji & Yamashiro, Guy M., 2010.
"The Effectiveness of Public Credit Guarantees in the Japanese Loan Market,"
Journal of the Japanese and International Economies,
Elsevier, vol. 24(4), pages 457-480, December.
- Uesugi, Iichiro & Sakai, Koji & Yamashiro, Guy M., 2008. "The Effectiveness of Public Credit Guarantees in the Japanese Loan Market," PIE/CIS Discussion Paper 400, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
- Douglas W. Diamond & Raghuram G. Rajan, 2002. "Bank Bailouts and Aggregate Liquidity," American Economic Review, American Economic Association, vol. 92(2), pages 38-41, May.
- Chris Chan & Danny Forwood & Heather Roper & Chris Sayers, 2009. "Public Infrastructure Financing: An International Perspective," Staff Working Papers 0902, Productivity Commission, Government of Australia.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kinken).
If references are entirely missing, you can add them using this form.