Financial Distress And Industry Structure: An Inter-Industry Approach To The Lost Decade In Japan
AbstractThis paper proposes a novel approach to investigating the propagation mechanism of balance sheet deterioration in financial institutions and firms, by extending the input--output analysis. First, we use a unique input--output table augmented by firm size dimension. Second, we link the input--output table with the balance sheet conditions of financial institutions and firms. Based on Japanese input--output tables, we find that the lending attitude of financial institutions affected firms’ input decision in the late 1990s and the early 2000s. Simulation exercises are conducted to evaluate the effects of changes in the lending attitude toward small firms as favorable as that toward large firms on sectoral allocations. We find that output was increased for small firms and reduced for large firms. The change in output was non-negligible, about 5.5% of the initial output of each sector. In particular, it exceeded 20% in textile, iron and steel and fabricated metal products.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Economic Systems Research.
Volume (Year): 24 (2012)
Issue (Month): 3 (April)
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Web page: http://www.tandfonline.com/CESR20
Other versions of this item:
- OGAWA Kazuo & Elmer STERKEN & TOKUTSU Ichiro, 2010. "Financial Distress and Industry Structure: An inter-industry approach to the "Lost Decade" in Japan," Discussion papers 10048, Research Institute of Economy, Trade and Industry (RIETI).
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- Love, Inessa & Preve, Lorenzo A. & Sarria-Allende, Virginia, 2005.
"Trade credit and bank credit : evidence from recent financial crises,"
Policy Research Working Paper Series
3716, The World Bank.
- Love, Inessa & Preve, Lorenzo A. & Sarria-Allende, Virginia, 2007. "Trade credit and bank credit: Evidence from recent financial crises," Journal of Financial Economics, Elsevier, vol. 83(2), pages 453-469, February.
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