IDEAS home Printed from https://ideas.repec.org/p/boj/bojwps/01-e-16r.html
   My bibliography  Save this paper

Sectoral Credit Shifts in Japan: Causes and Consequences of Their Decline in the 1990s

Author

Listed:
  • Yumi Saita

    (Bank of Japan)

  • Toshitaka Sekine

    (Bank of Japan)

Abstract

In this paper, we construct a simple measure of sectoral credit shifts, defined as the dispersion of growth rates of bank loans across sectors, and investigate what effects they had on Japan's economy and what accounted for their development. We find that (i) during the 1990s, the amount of sectoral credit shifts declined significantly, which was responsible for---in conjunction with effects from falls in land prices and aggregate outstanding loans---the stagnated real growth; and (ii) the decline in the credit shifts in the 1990s reflected weakened financial intermediation rather than a decrease in the size of sectoral shocks. These results are consistent with the view that financial intermediation was weakened by the exacerbated non-performing loan problems after the collapse of the asset price bubble, and thus prevented credits from shifting to relatively efficient sectors.

Suggested Citation

  • Yumi Saita & Toshitaka Sekine, 2001. "Sectoral Credit Shifts in Japan: Causes and Consequences of Their Decline in the 1990s," Bank of Japan Working Paper Series Research and Statistics D, Bank of Japan.
    • Handle: RePEc:boj:bojwps:01-e-16r
    as

    Download full text from publisher

    File URL: http://www.boj.or.jp/en/research/wps_rev/wps_2001/data/cwp01e16.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ogawa, Kazuo, 2000. "Monetary Policy, Credit, and Real Activity: Evidence from the Balance Sheet of Japanese Firms," Journal of the Japanese and International Economies, Elsevier, vol. 14(4), pages 385-407, December.
    2. Oda, Nobuyuki, 1999. "Estimating Fair Premium Rates for Deposit Insurance Using Option Pricing Theory: An Empirical Study of Japanese Banks," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 17(1), pages 133-170, May.
    3. Ogawa, Kazuo & Kitasaka, Shin-ichi & Yamaoka, Hiroshi & Iwata, Yasuharu, 1996. "Borrowing Constraints and the Role of Land Asset in Japanese Corporate Investment Decision," Journal of the Japanese and International Economies, Elsevier, vol. 10(2), pages 122-149, June.
    4. By James Morsink & Tamim Bayoumi, 2001. "A Peek Inside the Black Box: The Monetary Transmission Mechanism in Japan," IMF Staff Papers, Palgrave Macmillan, vol. 48(1), pages 1-2.
    5. Bayoumi, Tamim, 2001. "The morning after: explaining the slowdown in Japanese growth in the 1990s," Journal of International Economics, Elsevier, vol. 53(2), pages 241-259, April.
    6. Abraham, Katharine G & Katz, Lawrence F, 1986. "Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 507-522, June.
    7. Takeo Hoshi & Anil Kashyap, 2000. "The Japanese Banking Crisis: Where Did It Come From and How Will It End?," NBER Chapters, in: NBER Macroeconomics Annual 1999, Volume 14, pages 129-212, National Bureau of Economic Research, Inc.
    8. Lilien, David M, 1982. "Sectoral Shifts and Cyclical Unemployment," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 777-793, August.
    9. Mr. Toshitaka Sekine, 1999. "Firm Investment and Balance-Sheet Problems in Japan," IMF Working Papers 1999/111, International Monetary Fund.
    10. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
    11. Prasad, Eswar, 1997. "Sectoral shifts and structural change in the Japanese economy: Evidence and interpretation," Japan and the World Economy, Elsevier, vol. 9(3), pages 293-313, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hyeog Ug Kwon & Futoshi Narita & Machiko Narita, 2015. "Resource Reallocation and Zombie Lending in Japan in the 1990s," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 709-732, October.
    2. SAKAI Koji & UESUGI Iichiro, 2019. "The Extent and Efficiency of Credit Reallocation during Economic Downturns," Discussion papers 19004, Research Institute of Economy, Trade and Industry (RIETI).
    3. Sekine, Toshitaka & Kobayashi, Keiichiro & Saita, Yumi, 2003. "Forbearance Lending: The Case of Japanese Firms," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(2), pages 69-92, August.
    4. Iwaisako, Tokuo & 祝迫, 得夫 & Fukuoka, Chiaki & Kanou, Takefumi, 2013. "Debt Restructuring Of Japanese Corporations: Efficiency Of Factor Allocations And The Debt-Labor Complementarity," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 54(1), pages 119-135, June.
    5. Takatoshi Sasaki & Tomoya Sakata & Yui Mukoyama & Koichi Yoshino, 2021. "China's Long-Term Growth Potential: Can Productivity Convergence Be Sustained?," Bank of Japan Working Paper Series 21-E-7, Bank of Japan.
    6. Masashi Saito & Yoshihiko Hogen, 2014. "Portfolio Rebalancing Following the Bank of Japan's Government Bond Purchases: Empirical Analysis Using Data on Bank Loans and Investment Flows," Bank of Japan Research Papers 14-06-19, Bank of Japan.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Morana, Claudio, 2004. "The Japanese stagnation: an assessment of the productivity slowdown hypothesis," Japan and the World Economy, Elsevier, vol. 16(2), pages 193-211, April.
    2. Nagahata, Takashi & Sekine, Toshitaka, 2005. "Firm investment, monetary transmission and balance-sheet problems in Japan: an investigation using micro data," Japan and the World Economy, Elsevier, vol. 17(3), pages 345-369, August.
    3. Takashi Nagahata & Toshitaka Sekine, 2002. "The Effects of Monetary Policy on Firm Investment after the Collapse of the Asset Price Bubble: An Investigation Using Japanese Micro Data," Bank of Japan Working Paper Series Research and Statistics D, Bank of Japan.
    4. Wako Watanabe, 2004. "Prudential Regulation, the Credit Crunch" and the Ineffectiveness of Monetary Policy: Evidence from Japan," ISER Discussion Paper 0617, Institute of Social and Economic Research, Osaka University.
    5. Alan G. Ahearne & Joseph E. Gagnon & Jane Haltmaier & Steven Scott MacDonald, 2002. "Preventing deflation: lessons from Japan's experience in the 1990s," International Finance Discussion Papers 729, Board of Governors of the Federal Reserve System (U.S.).
    6. Abe, Masahiro & Ohta, Souichi, 2001. "Fluctuations in Unemployment and Industry Labor Markets," Journal of the Japanese and International Economies, Elsevier, vol. 15(4), pages 437-464, December.
    7. Robert Hassink & Dongheon Lee, 2017. "Industrial Variety and Structural Change in Korean Regional Manufacturing, 1992–2004," Growth and Change, Wiley Blackwell, vol. 48(2), pages 246-264, June.
    8. Heaton, Chris & Oslington, Paul, 2010. "Micro vs macro explanations of post-war US unemployment movements," Economics Letters, Elsevier, vol. 106(2), pages 87-91, February.
    9. Altonji, Joseph G & Ham, John C, 1990. "Variation in Employment Growth in Canada: The Role of External, National, Regional, and Industrial Factors," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 198-236, January.
    10. Fallick, Bruce Chelimsky, 1996. "The hiring of new labor by expanding industries," Labour Economics, Elsevier, vol. 3(1), pages 25-42, August.
    11. Jinzhu Chen & Prakash Kannan & Prakash Loungani & Bharat Trehan, 2012. "New evidence on cyclical and structural sources of unemployment," Proceedings, Federal Reserve Bank of San Francisco, issue March, pages 1-23.
    12. Sekine, Toshitaka & Kobayashi, Keiichiro & Saita, Yumi, 2003. "Forbearance Lending: The Case of Japanese Firms," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(2), pages 69-92, August.
    13. Anna Maria Ferragina & Francesco Pastore, 2008. "Mind The Gap: Unemployment In The New Eu Regions," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 73-113, February.
    14. Reicher, Claire, 2014. "The aggregate effects of long run sectoral reallocation," Kiel Working Papers 1928, Kiel Institute for the World Economy (IfW Kiel).
    15. Esther Eiling & Raymond Kan & Ali Sharifkhani, 2018. "Sectoral Labor Reallocation and Return Predictability," Working Papers 2018-006, Human Capital and Economic Opportunity Working Group.
    16. Roberto Basile & Alessandro Girardi & Marianna Mantuano & Francesco Pastore, 2012. "Sectoral shifts, diversification and regional unemployment: evidence from local labour systems in Italy," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 39(4), pages 525-544, November.
    17. Bruno Amable & Donatella Gatti & Jan Schumacher, 2006. "Welfare-State Retrenchment: The Partisan Effect Revisited," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 22(3), pages 426-444, Autumn.
    18. Herrendorf, Berthold & Rogerson, Richard & Valentinyi, Ákos, 2014. "Growth and Structural Transformation," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 6, pages 855-941, Elsevier.
    19. Matthew Rognlie & Andrei Shleifer & Alp Simsek, 2018. "Investment Hangover and the Great Recession," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(2), pages 113-153, April.
    20. Carlino, Gerald A. & DeFina, Robert H. & Sill, Keith, 2001. "Sectoral Shocks and Metropolitan Employment Growth," Journal of Urban Economics, Elsevier, vol. 50(3), pages 396-417, November.

    More about this item

    Keywords

    credit; sectoral shock; growth; non-performing loan;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:boj:bojwps:01-e-16r. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bank of Japan (email available below). General contact details of provider: https://edirc.repec.org/data/bojgvjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.