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Board of Governors of the Federal Reserve System (U.S.)
International Finance Discussion Papers
Loans to Japanese borrowers
David C. Smith
Abstract

This paper examines the characteristics of loans to Japanese borrowers using a relatively unexplored, contract-specific data set. I find that Japanese banks charge less on loans to Japanese borrowers than do foreign banks, holding constant many of the risk characteristics of the borrower. Moreover, Japanese banks vary pricing less across these risks than do foreign banks, suggesting that Japanese banks tend not to distinguish good risks from bad. Taken together, the results suggest that problems at Japanese banks stem from the behavior of the banks themselves, not simply from poor economic conditions. I also document a significant shortening in the maturity structure of Japanese loans in the late 1990s.


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David C. Smith, Loans to Japanese borrowers, Board of Governors of the Federal Reserve System (U.S.), International Finance Discussion Papers 769, 2003.
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Keywords: Bank loans ; Banks and banking - Japan
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