The Overview and Risks of Fund Finance

Takehisa Kanaguchi, Takehito Kawakami, Akira Hasebe and Yoshiya Ogawa
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Takehisa Kanaguchi: Bank of Japan
Takehito Kawakami: Bank of Japan
Akira Hasebe: Bank of Japan
Yoshiya Ogawa: Bank of Japan

No 23-E-5, Bank of Japan Review Series from Bank of Japan

Abstract: The funds see an increase in their financing demand, depending on their own investment stage, as the inflow into private equity funds and other funds continues. Under these circumstances, financial institutions promote their businesses based on the high profitability of Fund Finance. In addition, they have established a risk management system that pays attention to the risk characteristics associated with such finance. On the other hand, the funds lengthen loan terms and increase the leverage of Fund Finance in order to boost investment returns to investors, and increasing risks associated with Fund Finance have been identified. Therefore, it is important to understand the real picture of Fund Finance and carefully monitor its potential risks.

Date: 2023-06-19
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-fmk, nep-mfd and nep-rmg
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