Credit rationing and implicit contract theory : An empirical study

This paper investigate whether or not implicit contract relations predominate in the Japanese bank loan market and produce equilibrium credit rationing. The empirical evidence suggests that risks are shared between banks and firms through interest rate arrangements. This implies that commercial banks in Japan operate in a market dominated by implicit contract relations. However, the evidence does not support the view that Japanese commercial banks execute credit rationing in the sense of Fried and Howitt (1980). Furthermore, the results show that large banks differ from small banks in the risk consideration of loan contracts. These empirical results are completely consistent with the intermarket business group hypothesis such that the group formation aims to share risks and profits among members.     

OPTIMAL CONSUMPTION AND PORTFOLIO SELECTION WITH INCOMPLETE MARKETS AND UPPER AND LOWER BOUND CONSTRAINTS

We study an optimal consumption and portfolio selection problem for an investor by a martingale approach. We assume that time is a discrete and finite horizon, the sample space is finite and the number of securities is smaller than that of the possible securities price vector transitions. the investor is prohibited from investing stocks more (less, respectively) than given upper (lower) bounds at any time, and he maximizes an expected time additive utility function for the consumption process. First we give a set of budget feasibility conditions so that a consumption process is attainable by an admissible portfolio process. Also we state the existence of the unique primal optimal solutions. Next we formulate a dual control problem and establish the duality between primal and dual control problems. Also we show the existence of dual optimal solutions. Finally we consider the computational aspect of dual approach through a simple numerical example.     

Bounds on the efficiency of the residual design of extended BIB designs

This gives a complete proof for bounds of the efficiency, conjectured by Das and Kageyama (1992), on robustness of extended balanced incomplete block designs against the unavailability of any number of observations in a block.     

The Role of Network Effects in the US VCR Market, 1978–1986

This paper estimates the importance of indirect network effects in the US video cassette recorder (VCR) market between 1978 and 1986. Estimation reveals the significant role of networks in the format competition between VHS and Beta. The paper also finds that if Sony, the system sponsor of Beta, had aggressively introduced its VCRs at the early stage of competition, Beta would likely have dominated the market in 1985; instead, the format disappeared in 1989. Finally, the paper measures consumer welfare for the value of network effects in VCRs, and assesses the consumer welfare effect of standardization.     

Challenges for policy of network oriented society a Japanese view

Social impacts of digital information networks are described in terms of convergence of service modes, integration of socioeconomic activities, change in industrial structure, strengthening social infrastructure and enrichment of culture, with some reference to specific Japanese situations. Emphasis is placed on such issues as reorganization of regulatory measures, interoperability of systems and services, communities of interest, privacy and security, freedom of information, information resource development, software production, shift of workforce, societal receptivity, preservation and creation of culture, and lowering of language barriers.     

Default and Renegotiation in Financial Distress in the Multiple Bank Model: An Analysis of the Main Bank System

This paper explores whether the "main bank system" in Japan can be explained by a self-enforcing mechanism that motivates delegated monitorin g creditors to be committed not to execute inefficient liquidation even though all agents are risk-neutral. Using a multiple bank model, we specify a standard debt contract equilibrium in which the delegated monitoring creditor does not care about her reputation, and a main bank contract equilibrium in which the delegated monitoring creditor will attempt to honour the loan contract so as not to destroy her reputation. The results show that, under certain conditions, any equilibrium standard debt contract is dominated by an equilibrium main bank contract in which the debtor and the delegated monitoring creditor are strictly better off. Furthermore, the equilibrium main bank contract reflects the prominent features observed in actual bank loan contracts in Japan.
JEL Classification Numbers: D82, G21, G33, G34     

Balance‐of‐payments‐constrained cyclical growth with distributive class conflicts and productivity dynamics

This study builds a dynamic balance‐of‐payments‐constrained model that incorporates the endogenous determination of the economic growth rate, conflictive wage/price distribution and employment rate. The wages, commodity prices and employment rate are determined by the profit squeeze effect and labour‐saving technical change. The relative strength of these two effects generates different outcomes for the transitional dynamics and comparative statics analysis. Particularly, the model shows stability, instability and cyclical nature, the latter of which concurs with the evidence reported by previous empirical studies.     

Altruism as a motive for intergenerational transfers

This study investigates the role of altruism as a motive for transfer payments. In the existing literature on altruism, it is generally assumed that a transfer payment is made out of altruism that a transferor feels towards a transferee. This study demonstrates that this is not necessarily the case. By using a dynamic model in which children are altruistic towards parents, it demonstrates that such altruism may induce a parent to give a transfer to children.