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The Contribution of Bank Lending to the Long-Term Stagnation in Japan

Peek, Joe

While it is well established that bank lending to severely impaired (zombie) Japanese firms during the 1990s was detrimental to the Japanese economy, bank lending to troubled, but economically viable, firms may have had beneficial effects. The objective of this study is to investigate the consequences of increased bank lending to distressed Japanese firms in order to determine the extent to which those increased loans contributed to the recovery of distressed firms, rather than being used to insulate the firms from market forces in order to avoid the painful, but needed, restructuring. That is, is increased lending to a distressed firm associated with an improvement in the subsequent performance of the firm?

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Publisher
Center on Japanese Economy and Business, Graduate School of Business, Columbia University
Publication Origin
New York
Series
Center on Japanese Economy and Business Working Papers, 273
Academic Units
Center on Japanese Economy and Business
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