Bank Control and the Number of Bank Relations of Japanese Firms

We explore the determinants of the number of long-term bank relations of listed Japanese firms using a unique data set covering the period 1982-1999. Japanese listed firms have about seven long-term bank loan relations on average, but show a large variation around the average. We analyze the determinants of the choice for the number of bank relations. We use data on loan and equity ownership to address the impact of the Japan-specific bank-firm relations and bank control on the number of loans decision. Having a relation with a top-equity holding bank reduces the number of bank relations, while debt-rich and cash-poor firms have more bank relations.firm-bank relations, single versus multiple borrowing, bank control, discrete choice models

International spillovers of R&D and marginal social returns

This study analyzes marginal social and private returns of R&D investment through the impact of international spillovers of R&D stocks. We compare the marginal social with marginal private returns using data of 27 OECD and EU countries from 1995 to 2008. We consider two channels of R&D spillovers: embodied in trade flows and disembodied by bilateral technological proximity. We find that marginal social returns on R&D are much larger than the marginal private returns for R&D-intensive countries, in the embodied spillover channel. We also find that the embodied spillover channel through import flows is more important than the disembodied channel

FINANCIAL DISTRESS AND INDUSTRY STRUCTURE:AN INTER-INDUSTRY APPROACH TO THE LOST DECADE IN JAPAN

This paper proposes a novel approach to investigating the propagation mechanism of balance sheet deterioration in financial institutions and firms, by extending the input-output analysis. First, we use a unique input-output table augmented by firm size dimension. Second, we link the input-output table with the balance sheet conditions of financial institutions and firms. Based on Japanese input-output tables, we find that the lending attitude of financial institutions affected firms' input decision in the late 1990s and the early 2000s. Simulation exercises are conducted to evaluate the effects of changes in the lending attitude toward small firms as favorable as that toward large firms on sectoral allocations. We find that output was increased for small firms and reduced for large firms. The change in output was non-negligible, about 5.5% of the initial output of each sector. In particular, it exceeded 20% in textile, iron and steel and fabricated metal products