Balance Sheet Repair and Corporate Investment in Japan

August 4, 2014

Preview Citation

Format: Chicago

Joong S Kang. Balance Sheet Repair and Corporate Investment in Japan, (USA: International Monetary Fund, 2014) accessed November 23, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We trace Japanese firms’ behavior over the last decades using aggregate corporate balance sheet data. Financial health of Japanese corporate sector has improved and firms paid back significant amount of debt and rebuilt their liquidity buffers. They also expanded abroad while the pace of corporate investment moderated. Regarding the latter, model estimates on aggregate corporate investment over the post bubble period show that expectation about future profitability, in particular medium-term demand outlook, has been the major driver, implying that a successful implementation of structural reforms could have positive impact even in the near term by improving the medium-term demand outlook.

Subject: Asset and liability management, Asset valuation, Corporate investment, Corporate sector, Economic sectors, Financial statements, National accounts, Private investment, Public financial management (PFM)

Keywords: Asset valuation, Balance sheet, Balance sheet development, Balance sheet repair, Capital, Cash holding, Closing balance sheet account, Corporate investment, Corporate sector, Cost of capital, Financial statements, GDP, Global, Growth, Investment, Investment behavior, Japan, Nonresidential investment, Private investment, Securities investment, WP

Publication Details

Pages:

21
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2014/141
Stock No:

WPIEA2014141
ISBN:

9781498323628
ISSN:

1018-5941

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