Journal Article

Stock prices and bank lending behavior in Japan

Abstract: This study attempts to shed light on whether stock price movements have contributed to recent fluctuations in bank lending in Japan by examining the historical relationship between stock prices and bank lending in that country. It is found that prior to the mid-1980s the relationship between stock prices and bank lending was weak, but subsequently strengthened considerable. This coincided with a change in the regulatory environment that encouraged banking institutions to pay more attention to their capital positions. Since the late 1980s, fluctuations in stock prices appear to have made important contributions to fluctuations in bank lending in Japan.

Keywords: Stock - Prices - Japan; Japan; Bank loans; Banks and banking - Japan;

Bibliographic Information

Provider: Federal Reserve Bank of San Francisco

Part of Series: Economic Review

Publication Date: 1994

Pages: 31-42

Order Number: 1