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The nexus of finance and GDP growth in Japan: Do real interest rates matter?

  • Chang, Shu-Hwa
  • Huang, Liang-Chou
Registered author(s):

    This study empirically investigates whether real interest rates are associated with a stronger or weaker finance-growth relationship in the Japanese economy, where the relationships between banks and firms are characterized by main bank relationships and keirestu as well as a government implemented low interest rate policies since the early 1990s. Several econometric models are used to obtain empirical robustness. This study confirms the substantial effects of real interest rates on finance-growth relationships in Japan. In the regime with higher (lower) real interest rates, the banking system has significantly positive (adverse) effects on output growth. Empirical evidence exists that a low interest rate policy is an important hindrance to the ability of the banking system to impact economic growth in Japan.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0922-1425(10)00034-4
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    Article provided by Elsevier in its journal Japan and the World Economy.

    Volume (Year): 22 (2010)
    Issue (Month): 4 (December)
    Pages: 235-242

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    Handle: RePEc:eee:japwor:v:22:y:2010:i:4:p:235-242
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505557

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