We investigate the determinants of the end of lending relationships with banks using small business data. We also investigate how small businesses without lending relationships financed credit demand during the global financial shock. First, we find that firms with high internal cash holdings,...

One of the major lenders to small and medium-size enterprises (SMEs) is nonbank financial institutions. Unlike deposit-taking banks, nonbank financial institutions - those that do not take deposits - tend to charge high interest rates, instead of asking for collateral, in extending credit to...

This paper summarizes the results of two questionnaires presented to small and medium size enterprises (SMEs) by RIETI in February 2008 and February 2009. Given the limited data on SMEs, the purpose of the questionnaires is to understand the current status of financing for SMEs facing this...

Employing unique data from a corporate survey, this paper examines whether changes in the amount of firms' trade debt are driven by real and/or financial measures taken by the firms in response to exogenous shocks. We find that firms that adopted real measures reduced their trade debt, while...

We investigate the effect of close customer relationships on small firms' provision of trade credit during the 2001-2003 recession in Japan. Many studies argue that close customer relationships are costly for suppliers because when their main customer has a high proportion of the firm's total...

In this paper, using microdata in Japan, we investigate whether credit contagion decreases trade credit supply for small businesses. In 1997-98 the Japanese economy experienced a large recession, and the number of dishonored bills and the number of bankruptcy filings caused by the domino effect...

In this paper, we investigate whether adverse selection and/or moral hazard can be detected in credit guarantee schemes for small and medium enterprises (SMEs). Using bank-level data, we analyzed whether the subrogation rate is positively associated with the ratio of guaranteed loans to total...

Using the extensive microdata of the Credit Risk Database (CRD), established in 2001 by the Small and Medium Enterprise Agency of the Ministry of Economy, Trade and Industry (METI), in this paper we analyze the determinants for the life duration until legal bankruptcy of small and medium-size...

I present evidence on recent bankruptcy resolution and bankruptcy reform in Japan. Prior to bankruptcy, bank lenders are less likely to intervene than they did before. Most bankrupt firms experience abnormal president turnover around bankruptcy filings, regardless types of filings. Priority of...

The banking literature suggests that the low performance of the banking sector can spread to real economic activities, especially small businesses. Many previous studies insist that the Japanese experience of the 1990s supports this argument. However, many studies of small businesses are often...