Banking crisis and productivity of borrowing firms: Evidence from Japan |
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Authors: | Fumio Akiyoshi Keiichiro Kobayashi |
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Affiliation: | 1. Faculty of Economics, Osaka University of Economics, 2-2-8 Osumi, Higashiyodogawa-ku, Osaka 533-8533, Japan;2. The Research Institute of Economy, Trade and Industry, 1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan |
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Abstract: | We investigate the effects of bank distress on the productivity of borrowing firms by using data on listed companies in the Japanese manufacturing industry during the 1990s. We find that deterioration in the financial health of banks, which is measured by a decline in the capital-asset ratio, decreased the productivity of their borrowers during the period of the severe financial crisis (FY1997–1998). Our finding empirically confirms the theoretical view that an increase in financial friction negatively affects the productivity of the corporate sector. |
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