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The Effect of Bank Credit on Asset Prices: Evidence from the Japanese Real Estate Boom during the 1980s

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  • NADA MORA

Abstract

This paper studies whether bank credit fuels asset prices. Financial deregulation during the 1980s allowed keiretsus to obtain finance publicly and reduce their dependence on banks. Banks that lost these blue-chip customers increased their property lending, and serve as an instrument for the supply of real estate loans. Using this instrument, I find that a 0.01 increase in a prefecture's real estate loans as a share of total loans causes 14-20% higher land inflation compared with other prefectures over the 1981-91 period. The timing of losses of keiretsu customers also coincides with subsequent land inflation in a prefecture. Copyright 2008 The Ohio State University.

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Bibliographic Info

Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 40 (2008)
Issue (Month): 1 (02)
Pages: 57-87

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Handle: RePEc:mcb:jmoncb:v:40:y:2008:i:1:p:57-87

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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Cited by:
  1. KURASHIMA Daichi & MIZUNAGA Masashi & ODAKI Kazuhiko & WATANABE Wako, 2013. "Is Leverage a Determinant of Asset Price? Evidence from real estate transaction data," Discussion papers 13082, Research Institute of Economy, Trade and Industry (RIETI).
  2. Hott, C., 2011. "Lending behavior and real estate prices," Journal of Banking & Finance, Elsevier, vol. 35(9), pages 2429-2442, September.
  3. Zhang, Yanbing & Hua, Xiuping & Zhao, Liang, 2012. "Exploring determinants of housing prices: A case study of Chinese experience in 1999–2010," Economic Modelling, Elsevier, vol. 29(6), pages 2349-2361.
  4. Zhang, Yanbing & Hua, Xiuping & Zhao, Liang, 2011. "Monetary policy and housing prices; a case study of Chinese experience in 1999-2010," BOFIT Discussion Papers 17/2011, Bank of Finland, Institute for Economies in Transition.
  5. Christian Hott, 2009. "Banks and Real Estate Prices," Working Papers 2009-08, Swiss National Bank.

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