‘Abenomics' refers to a new unconventional economic policy regime in Japan since late 2012. It consists of the three arrows: unconventional monetary policy (the first arrow), expansionary fiscal policy (the second arrow), and economic growth strategies to encourage private investment (the...

In this paper, we explore whether unconventional monetary policy in Japan had a negative spillover effect on the rest of the world. After Prime Minister Abe advocated the new policy regime, the Japanese yen depreciated substantially which raised a concern that it would have a beggar-thy-neighbor...

Under the financial turbulence, the Bank of Japan (BOJ) had launched a series of unprecedented monetary policies in the late 1990s and the early 2000s. The conventional monetary policies were not effective under liquidity trap. However, some unconventional monetary policies, including zero...

Empirical studies in corporate finance have long been focused on the role of banks in reducing the costs of financial distress. The environment and events in Japan provide a "natural experiment" that allows such empirical studies. The number of bankruptcies steadily increased throughout the...

When a borrower faces an informational hold-up problem, deteriorating bank health might reduce a borrower's credit availability. However, a bank with an impaired balance sheet might attempt to "gamble for resurrection" and hence increase risky lending to "zombie" firms. The purpose of this paper...

The purpose of this paper is to investigate why the choice of invoice currency under exchange rate uncertainty depends not only on expectations but also on history. The analysis is motivated by the fact that the U.S. dollar has historically been the dominant vehicle currency in developing...

A "shock therapy" might have different impacts between large and small firms. In this paper, we focus on the clients of two large failed Japanese banks - the Long-term Credit Bank of Japan (LTCB) and the Nippon Credit Bank (NCB). We first show that subsequent events after the bank failures...

The purpose of this paper is to investigate what type of firm chooses long-term loans when the manager maximizes his expected payoff. Our theoretical model extends previous models in the following four respects. First, we allow the case where firms have internal funds. Second, we explicitly...

The purpose of this paper is to construct a new composite index of coincident economic indicators in Japan and to demonstrate their usefulness in forecasting recent short-run economic fluctuations. The method of construction is based on the single-index dynamic factor model. Our two types of...

The Japanese economy experienced prolonged recessions during the 1990s and the 2000s. Until the early 2000s, evergreen lending to "zombie firms" had distorted market discipline in terms of stabilizing the Japanese economy. A majority of the "zombie" firms recovered during the first half of the...