Credit Contagion and Trade Credit Supply: Evidence from Small Business Data in Japan

In this paper, using microdata in Japan, we investigate whether credit contagion decreases trade credit supply for small businesses. In 1997-98 the Japanese economy experienced a large recession, and the number of dishonored bills and the number of bankruptcy filings caused by the domino effect increased. During a period of credit contagion, if firms possess higher financial claims than other firms, the possibility of default becomes higher. Therefore, if the problem of credit contagion is serious during such a period, suppliers withdraw trade credit from customers with higher trade receivables. They might also withdraw more trade credit from customers even though the credit risk of the customers is low. We find that during a recession, suppliers reduce trade credit more for small businesses with higher trade receivables. Additionally, in the manufacturing trade, credit is reduced for both risky and non-risky small firms. This effect in other industries, however, is weak.

Changing Banking Relationships and Client Firm Performance: Evidence for Japan from the 1990s

The banking literature concludes that the performance of client firms deteriorates if their distressed main bank reduces the supply of credit. However, these results rely on the assumption that main banks have an information advantage over other banks, such that if a client firm changes its main bank, its access to credit worsens. Using Japanese data from a period including financial shocks, we show that firms change the main banking relationship when their main bank becomes distressed. In addition, the performance of client firms improves after a change in the main bank relationship. This implies that the availability of credit improves for these firms, despite the change in main bank.Bank--firm relationships; Bank distress; Private information

Debt Structure and Bankruptcy of Financially Distressed Small Businesses

Using a large sample of financially distressed small firms in Japan, we find that a distressed firm goes bankrupt faster if it uses proportionately more trade credits. Financially distressed firms experiencing a sharp decrease in trade payables are also more likely to go bankrupt. This suggests that coordination failure among a large number of dispersed trade creditors contributes to the bankruptcy of financially distressed firms. This finding supports the hypothesis that suppliers have an incentive to acquire credit information on distressed firms, and are able to do so more quickly than banks. Accordingly, they withdraw credits more quickly because trade credits, unlike bank loans, are unsecured.

Changing Banking Relationships and Client Firm Performance: Evidence for Japan from the 1990s

The banking literature concludes that the performance of client firms deteriorates if their distressed main bank reduces the supply of credit. However, these results rely on the assumption that main banks have an information advantage over other banks, such that if a client firm changes its main bank, its access to credit worsens. Using Japanese data from a period including financial shocks, we show that firms change the main banking relationship when their main bank becomes distressed. In addition, the performance of client firms improves after a change in the main bank relationship. This implies that the availability of credit improves for these firms, despite the change in main bank

Nonbank Financing and the Moral Hazard of SMEs (Japanese)

One of the major lenders to small and medium-size enterprises (SMEs) is nonbank financial institutions. Unlike deposit-taking banks, nonbank financial institutions - those that do not take deposits - tend to charge high interest rates, instead of asking for collateral, in extending credit to SMEs. Thus, there is a high possibility that information asymmetry between such nonbank lenders and SME borrowers may be creating adverse selection and moral hazard problems. Using the data taken from the "Survey of Financial Environment" conducted by the Small and Medium Enterprise Agency, this paper empirically examines whether or not moral hazard exists on the part of SMEs borrowing from nonbank financial institutions. The paper asserts the following two points: 1) Despite a decrease in both the amount of outstanding loans and the number of establishments, nonbank financial institutions are maintaining a high level of return on assets (ROA), measured as a percentage of recurring profits to total assets, and the total number of branches is not decreasing. Thus, judging from the data available on the part of nonbank financial institutions, it is hard to say that the market for nonbank financial institutions is shrinking. 2) Findings from an analysis of microdata on SMEs with a Bivariate Probit Model point to a high probability that borrowers from a nonbank financial institution will fall into a state of net capital deficiency within one year after resorting to such nonbank financing. Based on this, it is conceivable that companies using nonbank financing are opting for high-risk businesses thus resulting in higher loan loss risks. Such quantitative analysis results suggest that the problem of moral hazard is arising.

A Case of Nevoid Acanthosis Nigricans Successfully Treated with Topical Ketoconazole Plus Urea

Nevoid acanthosis nigricans (AN) is a rare form of benign AN that can be mostly found as a solitary lesion distributed along Blaschko’s lines (1). It is not associated with any known syndrome, endocrinopathy, drugs, or internal malignancy. Treatments include retinoid, calcipotriol, and laser treatments (2). Herein we report a case of nevoid AN successfully treated with topical ketoconazole plus ure

Ultralow radiant exposure of a short-pulsed laser to disrupt melanosomes with localized thermal damage through a turbid medium

Shimojo Y., Nishimura T., Tsuruta D., et al. Ultralow radiant exposure of a short-pulsed laser to disrupt melanosomes with localized thermal damage through a turbid medium. Scientific Reports 14, 20112 (2024); https://doi.org/10.1038/s41598-024-70807-7.Short-pulsed lasers can treat dermal pigmented lesions through selective photothermolysis. The irradiated light experiences multiple scattering by the skin and is absorbed by abnormal melanosomes as well as by normal blood vessels above the target. Because the fluence is extremely high, the absorbed light can cause thermal damage to the adjacent tissue components, leading to complications. To minimize radiant exposure and reduce the risk of burns, a model of the melanosome-disruption threshold fluence (MDTF) has been developed that accounts for the light-propagation efficiency in the skin. However, the light-propagation efficiency is attenuated because of multiple scattering, which limits the extent to which the radiant exposure required for treatment can be reduced. Here, this study demonstrates the principle of melanosome disruption with localized thermal damage through a turbid medium by ultralow radiant exposure of a short-pulsed laser. The MDTF model was combined with a wavefront-shaping technique to design an irradiation condition that can increase the light-propagation efficiency to the target. Under this irradiation condition, melanosomes were disrupted at a radiant exposure 25 times lower than the minimal value used in conventional laser treatments. Furthermore, almost no thermal damage to the skin was confirmed through a numerical simulation. These experimental and numerical results show the potential for noninvasive melanosome disruption and may lead to the improvement of the safety of short-pulsed laser treatment