How Strongly Do "Financing Constraints" Affect Firm Behavior?: Japanese Corporate Investment since the Mid-1980s
Research on Japanese corporate finance typically starts from the premise that banks decisively affect corporate behavior. Crucial to this premise in the Japanese context are two laims: that the strength of a firmâ€™s relationship with a specific bank (and the funds that the bank makes available to it) determines its financing constraints, and that those constraints decisively condition the way it behaves. Using firm-level data from the Corporate Enterprise Annual Statistics, I ask whether financing constraints significantly affected corporate investment in land and other fixed assets. I take firms in the real-estate-related industries and for comparison the manufacturing industry, and examine their investments during 1983-2009. The data suggest two conclusions. First, financial constraints did not significantly affect medium- and long-term investment in equipment. Second, most firms have not faced serious financial constraints during the decades since 1983. Many scholars argue that such constraints contributed both to the "Bubble" during the second half of 1980s and the following recession since the 1990s, the "Lost Two Decades". The data, however, show no evidence that financing constraints prevented firms from investing in real estate or other tangible fixed assets. These conclusions are consistent with those in other papers by Miwa, including Miwa [2011a]. They raise serious questions about the premises relating to Japanese financial markets that many scholars bring to their study of the Japanese economy. Investigating empirically the effectiveness of "financing constraints", they also have important implications for current research into macro-economic fluctuations.
|Date of creation:||Sep 2012|
|Contact details of provider:|| Postal: Hongo 7-3-1, Bunkyo-ku, Tokyo 113-0033|
Web page: http://www.carf.e.u-tokyo.ac.jp/english/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Miwa Yoshiro, 2011. "Bubble" or "Boom"?: Investigation of the Japanese economy in the second-half of 1980s with the firm-level data from the "Corporate Enterprise Annual Statistics", as preparatio," CARF J-Series CARF-J-078, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
- Yoshiro Miwa, 2011. """Bad Loans", "Delayed Disposals", "Follow-on and Zombie Lending", and the Lost Two Decades": Lessons from the Japanese Experience?" (in Japanese)," CIRJE J-Series CIRJE-J-235, CIRJE, Faculty of Economics, University of Tokyo.
- Miwa, Yoshiro & Ramseyer, J. Mark, 2006.
"The Fable of the Keiretsu,"
University of Chicago Press Economics Books,
University of Chicago Press,
edition 0, number 9780226532707.
- Yoshiro Miwa, 2011.
"Are Japanese Firms Becoming More Independent from Their Banks?: Evidence from the Firm-Level Data of the "Corporate Enterprise Quarterly Statistics," 1994-2009,"
CARF-F-251, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
- Yoshiro Miwa, 2012. "Are Japanese Firms Becoming More Independent from Their Banks?: Evidence from the Firm-Level Data of the "Corporate Enterprise Quarterly Statistics," 1994-2009," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 8(4), pages 415-452, August.
- Yoshiro Miwa, 2011. "Are Japanese Firms Becoming More Independent from Their Banks?: Evidence from the Firm-Level Data of the "Corporate Enterprise Quarterly Statistics," 1994-2009," CIRJE F-Series CIRJE-F-808, CIRJE, Faculty of Economics, University of Tokyo.
- Olivier Blanchard, 2009.
"The State of Macro,"
Annual Review of Economics,
Annual Reviews, vol. 1(1), pages 209-228, 05.
- Miwa Yoshiro & J. Mark Ramseyer, 2000.
"Banks and Economic Growth: Implications from Japanese History,"
CIRJE-F-87, CIRJE, Faculty of Economics, University of Tokyo.
- Miwa, Yoshiro & Ramseyer, J Mark, 2002. "Banks and Economic Growth: Implications from Japanese History," Journal of Law and Economics, University of Chicago Press, vol. 45(1), pages 127-164, April.
- Yoshiro Miwa & J. Mark Ramseyer, 2008. "The Implications of Trade Credit for Bank Monitoring: Suggestive Evidence from Japan," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(2), pages 317-343, 06.
- Yoshiro Miwa & J. Mark Ramseyer, 2004. "Directed Credit? The Loan Market in High-Growth Japan," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(1), pages 171-205, 03.
- Steven N. Kaplan & Luigi Zingales, 1997. "Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 169-215.
When requesting a correction, please mention this item's handle: RePEc:cfi:fseres:cf291. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.