Long Term Loans and Investment in Japan : An Empirical Analysis Based on the Panel Data of Japanese Firms

The purpose of this paper is to investigate whether that the policy-based allocation of long-term funds played an important role in promoting the high economic growth in post-war Japan. Using the panel data functions of Japanese firms, we estimate Tobin’s Q investment functions in two different sample periods － 1972-84 and 1985-96. In 1972-84, we find that the long-term loan ratio had an additional positive effect on investment. In particular, the result holds true regardless of the size of corporate cash flows or the type of corporate groupings. However, in 1985-96, we cannot find that a higher ratio of long-term loans increased the Japanese firm’s investment. The result indicates that the size of long-term loans had a great influence on the firm’s investment only before the financial liberalization in Japan.A part of this paper titled "The Role of Long-term Funds for Economic Development: Empirical Evidence in Japan, Korea, and Taiwan" was subsequently published in J. Fan, J. Teranishi, and M. Hanazaki eds., Desiging Financial Systems in East Asia & Japan (Routledge), 2004, p. 47-83.本文フィルはリンク先を参照のこ