IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Financial Intermediation with Heterogeneous Projects: An Application to the Japanese Credit Crunch

Japan has gone through a long period of stagnation in the 1990s. We use a model of financial intermediation and endogenous occupational choice to understand this stagnation. In this model, investment projects are partly financed by loans and banks screen candidates by looking at their wealth. Due to various idiosyncratic risks, total wealth is heterogeneous across households. Calibrating the model to Japan, we conclude that the successive lowering of interest rates by the Bank of Japan was doomed to be ineffective, and that cash injections into the banking sector have little impact. Modifications to the regulation of the lending practices are, however, very potent in getting the country out of a credit crunch. Le Japon a vécu une période prolongée de stagnation durant les années 1990. Nous étudions cette stagnation au moyen d'un modèle d'intermediation financière avec choix occupationnel. Dans ce modèle, les projets d'investissement nécessitent un financement externe et les banques sélectionnent les candidats en fonction de leur fortune. En raison de divers risques individuels, la fortune totale est hétérogène à travers la population. Étalonné au Japon, ce modèle nous permet de conclure que les réductions successives des taux d'intérêt ne pouvaient pas être efficaces et que les injections d'argent frais dans le système bancaire ont peu d'impact. Modifier la réglementation des pratiques de prêt est par contre une politique très efficace pour sortir le pays d'un rationnement excessif du crédit.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.unites.uqam.ca/eco/CREFE/cahiers/cah115.ps
Our checks indicate that this address may not be valid because: 404 Not Found (http://www.unites.uqam.ca/eco/CREFE/cahiers/cah115.ps [301 Moved Permanently]--> http://www.economie.uqam.ca/CREFE/cahiers/cah115.ps [301 Moved Permanently]--> http://economie.esg.uqam.ca/CREFE/cahiers/cah115.ps). If this is indeed the case, please notify (Stéphane Pallage)


File Function: Main text
Download Restriction: no

File URL: http://www.unites.uqam.ca/eco/CREFE/cahiers/cah115.pdf
Our checks indicate that this address may not be valid because: 500 Internal Server Error (http://www.unites.uqam.ca/eco/CREFE/cahiers/cah115.pdf [301 Moved Permanently]--> http://www.economie.uqam.ca/CREFE/cahiers/cah115.pdf [301 Moved Permanently]--> http://economie.esg.uqam.ca/CREFE/cahiers/cah115.pdf). If this is indeed the case, please notify (Stéphane Pallage)


File Function: Main text
Download Restriction: no

Paper provided by CREFE, Université du Québec à Montréal in its series Cahiers de recherche CREFE / CREFE Working Papers with number 115.

as
in new window

Length: 16 pages
Date of creation: Jun 2000
Date of revision:
Handle: RePEc:cre:crefwp:115
Contact details of provider: Postal: P.O. Box 8888, Downtown Station, Montreal (Canada) Quebec, H3C 3P8
Phone: (514) 987-6181
Fax: (514) 987-8494
Web page: http://ideas.uqam.ca/CREFE/
Email:


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.:

as in new window
  1. Takatoshi Ito & Yuri Nagataki Sasaki, 1998. "Impacts of the Basle Capital Standard on Japanese Banks' Behavior," Discussion Paper Series a356, Institute of Economic Research, Hitotsubashi University.
  2. Gertler, M. & Gilchrist, S., 1992. "Monetary Policy, Business Cycles and the Behavior of Small Manufacturing Firms," Working Papers 92-08, C.V. Starr Center for Applied Economics, New York University.
  3. Williamson, Stephen D, 1987. "Financial Intermediation, Business Failures, and Real Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1196-1216, December.
  4. V.V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 2000. "Can Sticky Price Models Generate Volatile and Persistent Real Exchange Rates?," NBER Working Papers 7869, National Bureau of Economic Research, Inc.
  5. Paul R. Krugman, 1998. "It's Baaack: Japan's Slump and the Return of the Liquidity Trap," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 137-206.
  6. Menzie D. Chinn & Michael P. Dooley, 1997. "Monetary Policy in Japan, Germany and the United States: Does One Size Fit All?," NBER Working Papers 6092, National Bureau of Economic Research, Inc.
  7. Edward J. Green & Soo-Nam Oh, 1991. "Can a "credit crunch" be efficient?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 3-17.
  8. Bernanke, Ben & Gertler, Mark, 1989. "Agency Costs, Net Worth, and Business Fluctuations," American Economic Review, American Economic Association, vol. 79(1), pages 14-31, March.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cre:crefwp:115. 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: (Stéphane Pallage)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.