Small Business Credit Scoring and Its Pitfalls: Evidence from Japan

This paper studies the Japanese credit scoring market using data on 2,000 small and medium‐sized enterprises and a small business credit scoring (SBCS) model widely used in the market. After constructing a model for determining a bank's profit maximization, some simulation exercises are conducted, and pitfalls of lending based on SBCS are indicated. The simulation results suggest that the reason why SBCS loan losses occur would be the combination of adverse selection and window‐dressing problems. In addition, omitted variable bias and transparency of financial statements are important.     

Chinese Yuan after Chinese Exchange Rate System Reform

I. Introduction The Chinese government announced its change in exchange rate system from the dollar peg system into a managed floating exchange rate system “with reference to” a currencybasket on 21 July 2005 1. The exchange rate system reform has been regarded as a historical?2006 The Authors regime switching in China. This Chinese government decision has preferable effects on neighboring countries in choosing exchange rate system or exchange rate policy because the monetary authorities …     

Monetary Transmission and Inventory: Evidence from Japanese Balance-Sheet Data by Firm Size

I analyse the response of inventories and short-term debts to monetary policy using disaggregated data on Japanese manufacturing firms classified by firm size. I find that monetary contraction decreases the inventories of large firms; however, inventories of small and medium firms increase considerably for the first several quarters. This implies that in a subcontracting system small and medium subcontractors serve as a buffer and alleviate the monetary shocks felt by their large parent firms. Moreover, inventory build-ups are financed by increases in accounts payable. I also find that for small firms land asset is important in easing credit conditions and increasing inventories.
JEL Classification Numbers: E22, E32, E44, E51.     

Correction to: Accounting Frauds and Main-Bank Monitoring in Japanese Corporations

Journal of Business Ethics -     

International spillovers of R&D and marginal social returns

This study analyzes marginal social and private returns of R&D investment through the impact of international spillovers of R&D stocks. We compare the marginal social with marginal private returns using data of 27 OECD and EU countries from 1995 to 2008. We consider two channels of R&D spillovers: embodied in trade flows and disembodied by bilateral technological proximity. We find that marginal social returns on R&D are much larger than the marginal private returns for R&D‐intensive countries, in the embodied spillover channel. We also find that the embodied spillover channel through import flows is more important than the disembodied channel.     

The global financial crisis and small- and medium-sized enterprises in Japan: how did they cope with the crisis?

In this paper, we examine the nature of the shocks that hit the small- and medium-sized enterprises (SMEs) in Japan during the global financial crisis that occurred in the wake of the massive number of non-performing subprime loans in the U.S. We examine how the SMEs responded to the shocks, using the unique surveys that were conducted by the Research Institute of the Economy, Trade and Industry in 2008 and 2009. The shocks were identified as demand, supply, and financial shocks. The demand shock was the most prevalent of the shocks, while the financial shock was least frequent. The SMEs took a spectrum of measures against the demand shock by seeking help from suppliers and financial institutions. We find that the measures taken by the SMEs crucially depended on the bank–firm relationship as well as the customer–supplier relationship. The bank-dependent SMEs asked their closely-affiliated financial institutions for help, while the SMEs less dependent on financial institutions sought help primarily from their suppliers. A long customer–supplier relationship plays an important role in mitigating the supply shock.     

On the cost-reducing effects of embodied technical progress: a panel study of the steel industry in Japan

To explicitly explain the cost-reducing effects of technical progress experienced by each firm, we assume that technical progress, namely, the prevalence of particular equipment, can be expressed by a function of logarithmic physical capital. Regarding the technology cost structure, we propose a modified dynamic cost function model that consists of the above equation, the translog variable cost equation containing technical progress as one of the factors, and Euler equations with respect to physical and research and development capital stocks. Using data on eight firms in the Japanese electric-furnace steel industry for the period 1970–1998, the model was empirically validated using the generalized method of moments. An elasticity of production cost with respect to technical progress showed a cost-reducing effect. This fact was influenced by the type of product and the extent of each firm’s R&D. Also derived from this model is one reasonable phenomenon of business-cyclically changing the use of endogenous capacity. This economic information supports the appropriateness of the above model, including the assumption of transforming technical progress into an endogenous variable, and the methods of analysis.     

Payoff dominance and risk dominance in the observable delay game: a note

We examine whether the payoff dominant sequential-move (Stackelberg) outcome is realized when timing is endogenized. We adopt the observable delay game formulated by Hamilton and Slutsky [Games Econ Behav 2(1):29–46, 1990]. We find that if one sequential-move outcome is payoff dominant, either (i) the outcome both players prefer is the unique equilibrium; or (ii) two sequential-move outcomes are equilibria and the one both players prefer is risk dominant. In other words, no conflict between payoff dominance and risk dominance in the observable delay game exists, in contrast to other games such as (non pure) coordination games. We also find that even if one of two sequential-move outcomes is the unique equilibrium outcome in the observable delay game, it does not imply that the equilibrium outcome is payoff dominant to the other sequential-move outcome.      

The right to adequate housing: evictions of the homeless and the elderly caused by the 2020 Summer Olympics in Tokyo

Abstract

The reconstruction of the National Stadium for the 2020 Summer Olympics and Paralympics in Tokyo has induced displacement of two groups of vulnerable people, raising concerns of the violation of human rights, particularly the right to adequate housing. The expansion of the stadium led to the expulsion of dozens of homeless people who lived in and around the park surrounding the stadium, and a sudden decision to demolish a nearby public housing estate built for the 1964 Summer Games forced over 200 tenants, most of whom were elderly, to be relocated. While the homeless people engaged in several rounds of negotiation with the government authorities, the majority of the housing tenants reluctantly agreed to move except for a few who kept demanding respectful treatment from the metropolitan government. Presenting the preliminary results of a mixed-method three-year qualitative study, this research note demonstrates that while the authority might have offered alternative housing considered ‘adequate’ in terms of physical living conditions, the process of evictions did not afford autonomy for the affected to choose where to live. The respective status of the affected – homeless and elderly – may demand the reconsideration of the concept of ‘adequate housing’ in relation to human dignity.     

The winner–loser effect in Japanese stock returns

This study examines the winner–loser effect using stocks listed on the Tokyo Stock Exchange (TSE) from 1975 to 1997. We uncover significant return reversals dominating the Japanese markets, especially over shorter periods such as 1 month. No momentum effect is observed, however. The 1-month return reversal remains significant even after adjusting for firm characteristics or risk. While the 1-month return reversal is not related to industry classification, it is partially a result of higher future returns to loser stocks with low trading volume. Our results show that investor overreaction may be a possible explanation for the 1-month return reversal in Japan.