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Corporate financing and product market competition: evidence from firm-level data in Japan

  • Takanori Tanaka

    ()

    (Institute of Social and Economic Research, Osaka University)

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    This paper investigates the link between external financing and product market competition by focusing on different maturity structures. Using firm-level data for Japanese manufacturing firms over the period 1990-1995, we find that long-term loans enable firms to compete aggressively at a level below profit maximization. By contrast, short-term loans are not related to product market competition. Our results suggest that long-term loans play an important role in investment in market share for long-term profits through lowering prices.

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    File URL: http://www.accessecon.com/Pubs/EB/2010/Volume30/EB-10-V30-I2-P127.pdf
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    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 30 (2010)
    Issue (Month): 2 ()
    Pages: 1373-1383

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    Handle: RePEc:ebl:ecbull:eb-09-00440
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