Kobayashi, Keiichiro; Saita, Yumi; Sekine, Toshitaka - Bank of Japan - 2002
known as forbearance lending. We illustrate this using a simple model in which a bank is shown to have an incentive to … engage in forbearance lending to a borrower firm whose debt-asset ratio exceeds a certain threshold as its liquidation value … lower their profitability. These findings are consistent with the view that forbearance lending certainly took place in …