Paying for the FILP
This paper examines the financial health of the Fiscal Investment and Loan Program (FILP) as of the end of March 2001. We study the financial conditions of FILP recipients, which include public corporations and local governments. We find many are de facto insolvent. Our estimates suggest as much as 75% of the FILP loans are bad. The expected losses are estimated to be about ?75 trillion (over 15% of GDP). We also studied the effects of the FILP reform of April 2001, which tries to introduce market discipline in allocation of FILP funds. No significant changes in financial flow are detected, yet. The financial market seems to differentiate the newly introduced FILP agency bonds, which are supposed to without government guarantee, from government guaranteed bonds. It is too early to tell, however, whether the financial market will become an effective monitor of FILP agencies.
|Date of creation:||Dec 2002|
|Date of revision:|
|Publication status:||published as Paying for the FILP , Takero Doi, Takeo Hoshi. in Structural Impediments to Growth in Japan , Blomström, Corbett, Hayashi, and Kashyap. 2003|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- "Iwamoto, Yasushi", 2001. "Fiscal Investment and Loan Program―A Perspective on Government Interventions in the Japanese Financial Sector―," Economic Review, Hitotsubashi University, vol. 52(1), pages 2-15, January.
- Takeo Hoshi & Anil Kashyap, 2004. "Corporate Financing and Governance in Japan: The Road to the Future," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262582481, March.
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