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A Panel Study of eZombief SMEs in Japan: Identification, Borrowing and Investment Behavior

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  • Kentaro Imai

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    (Graduate School of Economics, Osaka University)

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    Abstract

    We estimated the extent to which ezombief SMEs existed in Japan by using panel data set of firms and investigated borrowing and investment functions of ezombief SMEs. We found that 5%`13% of SMEs are ezombief firms. As for borrowing behavior, ezombief firms did not succeed in reducing their loans. A fall in land value of SMEs induced an increase in borrowing of ezombief firms or ever-greening. We also find that the profitability of investment, measured by marginal q and the increment of output, did not increase investment for the ezombief firm, but rather ever-greening of loans increased investment in less productive and profitable projects.

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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/1316.pdf
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    Bibliographic Info

    Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 13-16.

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    Length: 26 pages
    Date of creation: Jul 2013
    Date of revision:
    Handle: RePEc:osk:wpaper:1316

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    Web page: http://www.econ.osaka-u.ac.jp/
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    Keywords: ezombief firms; ever-greening; SMEs; borrowing; investment;

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    1. Takeo Hoshi & Anil K. Kashyap, 2004. "Japan's Financial Crisis and Economic Stagnation," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 3-26, Winter.
    2. Ogawa, Kazuo & Kitasaka, Shin-ichi & Yamaoka, Hiroshi & Iwata, Yasuharu, 1996. "Borrowing Constraints and the Role of Land Asset in Japanese Corporate Investment Decision," Journal of the Japanese and International Economies, Elsevier, vol. 10(2), pages 122-149, June.
    3. Berglof, Erik & Roland, Gerard, 1997. "Soft budget constraints and credit crunches in financial transition," European Economic Review, Elsevier, vol. 41(3-5), pages 807-817, April.
    4. Ricardo J. Caballero & Takeo Hoshi & Anil K. Kashyap, 2006. "Zombie Lending and Depressed Restructuring in Japan," NBER Working Papers 12129, National Bureau of Economic Research, Inc.
    5. Shin‐ichi Fukuda & Jun‐ichi Nakamura, 2011. "Why Did ‘Zombie’ Firms Recover in Japan?," The World Economy, Wiley Blackwell, vol. 34, pages 1124-1137, 07.
    6. Koji Sakai & Iichiro Uesugi & Tsutomu Watanabe, 2005. "Firm Age and the Evolution of Borrowing Costs: Evidence from Japanese Small Firms," Discussion papers 05026, Research Institute of Economy, Trade and Industry (RIETI).
    7. Alan G. Ahearne & Naoki Shinada, 2005. "Zombie Firms and Economic Stagnation in Japan," Hi-Stat Discussion Paper Series d05-95, Institute of Economic Research, Hitotsubashi University.
    8. Takeo Hoshi, 2006. "Economics Of The Living Dead," The Japanese Economic Review, Japanese Economic Association, vol. 57(1), pages 30-49.
    9. Taizo Motonishi & Hirshi Yoshikawa, 1999. "Causes of the Long Stagnation of Japan During the 1990s: Financial or Real?," NBER Working Papers 7351, National Bureau of Economic Research, Inc.
    10. Ogawa, K. & Suzuki, K., 1996. "Land Value and Corporate Investment: Evidence from Japanese Panel Data," ISER Discussion Paper 0408, Institute of Social and Economic Research, Osaka University.
    11. Nagahata, Takashi & Sekine, Toshitaka, 2005. "Firm investment, monetary transmission and balance-sheet problems in Japan: an investigation using micro data," Japan and the World Economy, Elsevier, vol. 17(3), pages 345-369, August.
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