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Balance Sheet Repair and Corporate Investment in Japan

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  • Mr. Joong S Kang

Abstract

We trace Japanese firms’ behavior over the last decades using aggregate corporate balance sheet data. Financial health of Japanese corporate sector has improved and firms paid back significant amount of debt and rebuilt their liquidity buffers. They also expanded abroad while the pace of corporate investment moderated. Regarding the latter, model estimates on aggregate corporate investment over the post bubble period show that expectation about future profitability, in particular medium-term demand outlook, has been the major driver, implying that a successful implementation of structural reforms could have positive impact even in the near term by improving the medium-term demand outlook.

Suggested Citation

  • Mr. Joong S Kang, 2014. "Balance Sheet Repair and Corporate Investment in Japan," IMF Working Papers 2014/141, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2014/141
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    References listed on IDEAS

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    Cited by:

    1. Atsuki Hirata & Yusuke Takahashi & Naoya Kato, 2025. "Interest Rate Sensitivity of Capital Investment in Japan: An Analysis Using Panel LP-IV," Bank of Japan Working Paper Series 25-E-13, Bank of Japan.
    2. Galen Sher, 2014. "Cashing in for Growth: Corporate Cash Holdings as an Opportunity for Investment in Japan," IMF Working Papers 2014/221, International Monetary Fund.
    3. Mr. Giovanni Ganelli & Naoko Miake, 2015. "Foreign Help Wanted: Easing Japan’s Labor Shortages," IMF Working Papers 2015/181, International Monetary Fund.
    4. J. Boeckx & P. Butzen & N. Cordemans & S. Ide, 2015. "Deflation in Japan, Abenomics and lessons for the euro area," Economic Review, National Bank of Belgium, issue i, pages 100-124, June.

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