“The Reality of Short-term Shocks like the ‘Credit Crunch’ of 1997-1999 and the ‘Financial Crisis’ of 2007, and the Effectiveness of ‘Emergency’ Economic Measures– A Follow-up to Miwa [2008]”



This is the second of the 4 discussion papers that, together with the Introduction and Summary paper (Miwa, 2010c), comprise the report of my recent investigation: "A Study of Financing Behavior of Japanese Firms with Firm-Level Data from the "Corporate Enterprise Quarterly Statistics --1994-2009". In Miwa [2008], I used quarterly financial data on about 6,000 firms with over 600 million Yen in paid-in capital to question the purported success of Japanese policy toward the financial crisis and the accumulated bad loans at banks, the debate over the causes of the Lost Decade, and postwar financial regulation more generally. This paper is a follow-up to Miwa [2008]. It expands the period studied from 1994-2000 to 1994-2009, expands the focus to include much smaller firms, and redesigns the study to encompass wider issues. Taking the basic finding reported in Miwa [2010d] into consideration, I classified firms into two groups: firms with non-zero short-term-bank-borrowing at the beginning of the term (type A), and all others (type B). Focusing on the type A firms, I control the predominant influence of zero-short-term-bank-borrowing firms, and confirm the conclusion of Miwa [2008]. In the second half of the paper, I investigate the distribution of the ratio of the amount of financial items like payables, receivables, and inventory to total assets (level variables), and the change in the amount of financial items to total assets (difference variables). Surprisingly, the distributions both in level variables and difference variables remained stable during the "Credit Crunch", the "Financial Crisis", and the "zero-interest-rate, quantity easing" monetary policy period.