Long Term Loans and Investment in Japan: An Empirical Analysis Based on the Panel Data of Japanese Firms
The purpose of this paper is to investigate whether that the policy-based allocation of long-term funds played an important role in promoting the high economic growth in post-war Japan. Using the panel data functions of Japanese firms, we estimate Tobin fs Q investment functions in two different sample periods - 1972-84 and 1985-96. In 1972-84, we find that the long-term loan ratio had an additional positive effect on investment. In particular, the result holds true regardless of the size of corporate cash flows or the type of corporate groupings. However, in 1985-96, we cannot find that a higher ratio of long-term loans increased the Japanese firm's investment. The result indicates that the size of long-term loans had a great influence on the firm's investment only before the financial liberalization in Japan.
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- Fukuda, Shin-ichi & Cong, Ji & Nakamura, Akihiro, 1998. "Determinants of long-term loans: a theory and empirical evidence in Japan," Journal of Multinational Financial Management, Elsevier, vol. 8(2-3), pages 113-135, September.
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Finance and Economics Discussion Series
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- Shin-ichi Fukuda & Ji Cong & Akihiro Nakamura, 1998. ","Determinants of Long-term Loans: A Theory and an Empirical Evidence in Japan"," CIRJE F-Series 98-F-2, CIRJE, Faculty of Economics, University of Tokyo.
- Douglas W. Diamond, 1991. "Debt Maturity Structure and Liquidity Risk," The Quarterly Journal of Economics, Oxford University Press, vol. 106(3), pages 709-737.
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