Long Term Loans and Investment in Japan: An Empirical Analysis Based on the Panel Data of Japanese Firms
AbstractThe purpose of this paper is to investigate whether that the policy-based allocation of long-term funds played an important role in promoting the high economic growth in post-war Japan. Using the panel data functions of Japanese firms, we estimate Tobinfs Q investment functions in two different sample periods | 1972-84 and 1985-96. In 1972-84, we find that the long-term loan ratio had an additional positive effect on investment. In particular, the result holds true regardless of the size of corporate cash flows or the type of corporate groupings. However, in 1985-96, we cannot find that a higher ratio of long-term loans increased the Japanese firmfs investment. The result indicates that the size of long-term loans had a great influence on the firmfs investment only before the financial liberalization in Japan.
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Bibliographic InfoPaper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-80.
Length: 36 pages
Date of creation: Jul 2000
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-07-27 (All new papers)
- NEP-FIN-2000-07-27 (Finance)
- NEP-FMK-2000-07-27 (Financial Markets)
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