Productivity and Financing of Startups (Japanese)

Economists have pointed out that the Japanese slow productivity growth in the 90s was caused by the lack of creative destruction. To investigate the topic, we focus on the behavior of newly founded firms. First, we study how long they keep high productivity by examining the effect of firm age on productivity. The results indicate that firms reach their highest productivity approximately eight years after they are established. Second, we investigate whether the establishment of firms is constrained by financing. A multinomial logit model is then used for analyses of each type of financial institution to see if loans are approved for firms with high productivity. The estimation results indicate that while major commercial banks do provide loans to high-productivity firms, government-affiliated financial institutions conversely provide loans to low-productivity firms. The findings for the 90s also indicate that the tendency of major commercial banks to provide loans to high-productivity firms intensified from the 90s.