The Effectiveness of Public Credit Guarantees in the Japanese Loan Market

This paper examines the effectiveness of public credit guarantee programs in not only increasing the availability of loans to small and medium enterprises (SMEs), but in also improving the ex-post performance of borrowing firms. Using a unique panel data set, we identify the effects of a massive cre...

Full description

Saved in:
Bibliographic Details
Published in:Journal of the Japanese and international economies 2010-12, Vol.24 (4), p.457-480
Main Authors: Uesugi, Iichiro, Sakai, Koji, Yamashiro, Guy M.
Format: Article
Language:English
Subjects:
Borrowing
Commercial credit
Credit crunch
Credit crunch Loan guarantees Matching estimation Small and medium enterprises
Credit market
Credit systems
Economic theory
Effectiveness studies
Estimation
Financial crisis
Guaranteed loans
Japan
Liquidity
Loan guarantees
Loans
Matching estimation
Small & medium sized enterprises-SME
Small and medium enterprises
Small business loans
Studies
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This paper examines the effectiveness of public credit guarantee programs in not only increasing the availability of loans to small and medium enterprises (SMEs), but in also improving the ex-post performance of borrowing firms. Using a unique panel data set, we identify the effects of a massive credit guarantee program implemented by the Japanese government from 1998 to 2001. While we do find that the availability of loans increased for program participants, when loans were provided by undercapitalized banks the increased liquidity persisted for only a few years. Further, the ex-post performance of program participants, with the exception of firms with sizable net worth, deteriorated relative to their non-participating counterparts.
ISSN:0889-1583
1095-8681
DOI:10.1016/j.jjie.2010.08.001