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An empirical contribution to Minsky’s financial fragility:Evidence from non-financial sectors in Japan

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  • Hiroshi Nishi

Abstract

This study presents an empirical analysis to detect Minsky’s financial fragility and its determinants in the non- financial sectors in Japan, with particular attention paid to differences between sectors and sizes. While Minsky developed theoretical analyses of financial fragility for use in economic growth models, its empirical application is limited. Based on the financial fragility indices derived from a cash flow accounting framework and Minsky’s margins of safety, I detect the overall configuration and evolution of financial fragility (hedge, speculative, and Ponzi) in Japan. Then, the factors that determine the probability of being Ponzi finance are detected by using panel logistic regression. In doing so, this study reveals that although speculative finance is dominant in many sectors, the evolution of financial fragility is diversified and its determinants differ according to sector and size in Japan.

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  • Hiroshi Nishi, 2016. "An empirical contribution to Minsky’s financial fragility:Evidence from non-financial sectors in Japan," Discussion papers e-16-007, Graduate School of Economics , Kyoto University.
    • Handle: RePEc:kue:epaper:e-16-007
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    Cited by:

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    2. Engelbert Stockhammer & Giorgos Gouzoulis & Rob Calvert Jump, 2019. "Debt-driven business cycles in historical perspective: The cases of the USA (1889-2015) and UK (1882-2010)," Working Papers PKWP1907, Post Keynesian Economics Society (PKES).
    3. Engelbert Stockhammer & Giorgos Gouzoulis, 2023. "Debt-GDP cycles in historical perspective: the case of the USA (1889–2014)," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 32(2), pages 317-335.
    4. Filippo Gusella & Engelbert Stockhammer, 2021. "Testing fundamentalist–momentum trader financial cycles: An empirical analysis via the Kalman filter," Metroeconomica, Wiley Blackwell, vol. 72(4), pages 758-797, November.
    5. Esteban Pérez Caldentey & Nicole Favreau Negront & Luis Méndez Lobos, 2019. "Corporate debt in Latin America and its macroeconomic implications," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 42(3), pages 335-362, July.
    6. Maria Nikolaidi, 2017. "Three decades of modelling Minsky: what we have learned and the way forward," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 14(2), pages 222-237, September.
    7. Leila E Davis & Joao Paulo A de Souza & Gonzalo Hernandez, 2019. "An empirical analysis of Minsky regimes in the US economy," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(3), pages 541-583.
    8. Gerasimos T. Soldatos & Erotokritos Varelas, 2023. "Are Banks Too Many? A Theoretical Possibility and a Policy Issue," Journal of Economic Analysis, Anser Press, vol. 2(1), pages 36-52, February.
    9. Hans D. G. Hyun, 2023. "A financial frontier model with bankers' susceptibility under uncertainty," Metroeconomica, Wiley Blackwell, vol. 74(1), pages 94-118, February.
    10. Reissl, Severin, 2020. "Minsky from the bottom up – Formalising the two-price model of investment in a simple agent-based framework," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 109-142.
    11. -, 2019. "Economic Survey of Latin America and the Caribbean 2019. The new global financial context: effects and transmission mechanisms in the region," Estudio Económico de América Latina y el Caribe, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 44675 edited by Eclac.
    12. Ernani Teixeira Torres Filho & Norberto Montani Martins & Caroline Yukari Miaguti, 2017. "Minsky's Financial Fragility: An Empirical Analysis of Electricity Distribution Companies in Brazil (2007-15)," Economics Working Paper Archive wp_896, Levy Economics Institute.
    13. Ítalo Pedrosa & Dany Lang, 2021. "To what extent does aggregate leverage determine financial fragility? New insights from an agent-based stock-flow consistent model," Journal of Evolutionary Economics, Springer, vol. 31(4), pages 1221-1275, September.

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    More about this item

    Keywords

    Minsky; Financial fragility; Margin of safety; Japanese economy;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East

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