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Banking crisis and productivity of borrowing firms: Evidence from Japan

  • Akiyoshi, Fumio
  • Kobayashi, Keiichiro

We investigate the effects of bank distress on the productivity of borrowing firms by using data on listed companies in the Japanese manufacturing industry during the 1990s. We find that deterioration in the financial health of banks, which is measured by a decline in the capital-asset ratio, decreased the productivity of their borrowers during the period of the severe financial crisis (FY1997-1998). Our finding empirically confirms the theoretical view that an increase in financial friction negatively affects the productivity of the corporate sector.

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Article provided by Elsevier in its journal Japan and the World Economy.

Volume (Year): 22 (2010)
Issue (Month): 3 (August)
Pages: 141-150

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Handle: RePEc:eee:japwor:v:22:y:2010:i:3:p:141-150
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505557

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