In Search of "Capital Crunch": Supply Factors Behind the Credit Slowdown in Japan

January 1, 1999

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Format: Chicago

David Woo. In Search of "Capital Crunch": Supply Factors Behind the Credit Slowdown in Japan, (USA: International Monetary Fund, 1999) accessed December 22, 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

The seeming failure of loose monetary policy to reactivate Japan’s economy has led some observers to suggest that the usual credit channels through which monetary policy affects the real economy are blocked, and this because of a pervasive shortage of bank capital that has induced a leftward shift in the supply of bank credit: the so called credit crunch hypothesis. This paper finds support for the hypothesis in the 1997 bank data—a year during which the landscape of the Japanese financial system was changed fundamentally—but finds no, or even contrary, evidence, for most of the 1990’s.

Subject: Bank credit, Banking, Capital adequacy requirements, Credit, Financial institutions, Financial regulation and supervision, Loans, Money, Nonperforming loans

Keywords: Bank, Bank capital, Bank Capitalization, Bank credit, Bank data, Bank restructuring package, Capital adequacy requirements, Capital base, Capitalized bank, City bank, Credit, Credit Crunch, Developments bank, East Asia, Japanese Banks, Loan, Loan growth, Loans, Long-term credit bank, Loss reserve cover, Nonperforming loans, Reserve cover, Securities holding, South Asia, Trust bank, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1999/003
Stock No:

WPIEA0031999
ISBN:

9781451841886
ISSN:

1018-5941

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