Prob. of incumbents’ default: xqI= 0,
Productivity (total): Mass of incumbents: NI =
zu Aggregate output: Y =
θ
Real wage (entrants): W˜E
P = ˜ηγY fEφ˜, Real wage (incumbents): W˜I
P = ˜ηγY fIφ˜, Loan rate (entrants): RlE = d(¯zE)
( ˜WE/P)fE, Loan rate (incumbents): Rq,lI =R.
References
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Table 1: Availability of credit from the main bank
2004 2005 2006 2007 2008 Credit application was refused or its amount
re-duced (among applicants)
8.6 8.8 6 6.8 9.2
Credit application was accepted with tightened borrowing conditions (among applicants)
18.1 17.8 15.8 15.9 17.2 Did not submit credit application in the past
year
43 50.9 46.7 49.7 48.7
Source: Basic Survey of Small and Medium Enterprises, The Ministry of Small and Medium Enterprises Agency.
Table 2: Availability of credit and the source of funds by developmental phase
early growth growth and expansion stable total Availability of credit
Obtained funds as desired 61.3 87.9 97.4 93.9
Did not obtain funds as desired 38.7 12.1 2.6 6.1
Source of funds
Financial institutions 82.9 91.3 91.9 91.3
Representative/executives 68.6 28.7 19.2 24.3
Venture capital 45.7 16.2 10.3 13.7
Business partners/affiliated companies 28.6 13.0 11.9 13.1
Relatives/acquaintances 35.2 13.0 11.0 12.9
Company funds (cash flow) 17.1 22.0 27.4 25.5
Source:White Paper on Small and Medium Enterprises in Japan 2009, The Ministry of Small and Medium Enterprises Agency. The questionnaire was conducted by Tokyo Shoko Research Ltd.
Note: Only for SMEs that conduct R&D.
Table 3: What has made external finance difficult?
Deterioration in the business condition of the related industry 50.6 Deterioration in the company’s profitability 46.4
Financial institutions’ problems 43.8
Deterioration in the asset value of the company and/or the manager 14.2
Others 3.6
Source:White Paper on Small and Medium Enterprises in Japan 2009, The Ministry of Small and Medium Enterprises Agency. The questionnaire was conducted by Mizuho Research Institute.
Note: Based on the questionnaire to the SMEs that replied that loans from financial institutions have become tighter than before.
Table 4: Classification of the credit channels
BS BL CR
key policy variable interest rate money supply interest rate
credit rationing? no yes yes
source of rationing n.a. bank liquidity creditworthiness
Note: BS, BL and CR denote the balance-sheet channel, the bank-lending channel and the credit rationing channel, respectively.
-80 -40 0 40 80 120
84 86 88 90 92 94 96 98 00 02 04 06 08
DI: financial position (easy minus tight)
DI: lending attitude of financial institutions (accomodative minus severe) DI: change in interest rate on loans (rise minus fall)
Figure 1: Diffusion indices regarding the external finance conditions of SMEs
Source:TANKAN, Bank of Japan.
-30 -20 -10 0 10 20 30
80 100 120 140 160 180
84 86 88 90 92 94 96 98 00 02 04 06 08
DI: financial position growth rate of investment
newly registered firms/1000 (right scale)
Figure 2: Easiness in external finance, firm entry and fixed investment
Source: DI and fixed investment: TANKAN, Bank of Japan. Number of newly registered firms: White paper on Small and Medium Enterprises 2009, The Ministry of Small and Medium Enterprise Agency.
Aggregate
shocks observed. Pay wages for the
preparatory labor Borrow
from a bank
continue to produce in the next period
exit from the market repay the full
amount to the bank
default Production ends,
and
pay wages for the productive labor.
Figure 3: Sequence of events
A
B CC
DD
RHS of (12)
Figure 4: Graphical illustration of equilibrium credit rationing
A
E RHS of （15）
RHS of （12）
Figure 5: Determination of ¯zI,t+11+q when incumbents are risky borrowers
A RHS of （12）
RHS of （15）
Figure 6: Determination of ¯zI,t+11+q when incumbents are safe borrowers
0 5 10 15 20
4x 10-3 ave. loan rates: all firms
0 5 10 15 20
0 2 4 6
8x 10-3 ave. loan rates: incumbents
0 5 10 15 20
8x 10ave. premium (raw value): incumbents-3
0 5 10 15 20
15x 10-3 bank lending-output ratio
0 5 10 15 20
0 0.5 1
common productivity
Figure 7: The impacts of a positive common productivity shock
36
0 5 10 15 20
4x 10-3 ave. loan rates: all firms
0 5 10 15 20
0 1
2x 10-4 ave. loan rates: incumbents
0 5 10 15 20
2x 10ave. premium (raw value): incumbents-4
0 5 10 15 20
Figure 8: The impacts of a negative common productivity shock
37
0 5 10 15 20
2x 10-4 ave. of productivity
0 5 10 15 20
Figure 9: The impacts of a negative policy-rate shock
38
0 5 10 15 20
4x 10-4 ave. of productivity
0 5 10 15 20
Figure 10: The impacts of a positive financial shock
39
0 5 10 15 20
Figure 11: The impacts of a large negative productivity shock
40
0 5 10 15 20
0x 10-14 fixed-labor wage: entrants
0 5 10 15 20
Figure 12: The impacts of a large positive financial shock
41
0 20 40 60 80 100
Figure 13: A simulated path: the common productivity and financial shocks
42
-2 -1 0 1 2
Figure 14: Around the crisis period: quarterly
43
-2 -1 0 1 2
Figure 15: Around the crisis period: annual
44