Finding the causal effects of liquidity shocks on credit supply is complicated by the endogenous relation between loan demand and liquidity position of banks. This paper attempts to overcome this problem by exploiting, as a natural experiment, the exogenous deposit outflow prompted by the...

Beginning in 2000, Japan’s government-owned postal saving system experienced a rapid outflow of funds as a large number of 10-year fixed-rate Postal Saving Certificates (PSCs) that had been purchased during the period of high interest rates in the early 1990s were maturing. This paper exploits...