Incentive Effects of Conditional Bank Recapitalisation: Lending and Disclosure of Non-Performing Loans

Philippe Aghion, Patrick Bolton and Steven Fries

Chapter 3 in Banking, Capital Markets and Corporate Governance, 2001, pp 31-50 from Palgrave Macmillan

Abstract: Abstract It is widely believed that one of the main sources of the prolonged economic slump of the Japanese economy in the 1990 is the collapse of asset and real estate prices, which have led to a banking crisis of an unprecedented scale. It is in large part the failure promptly to resolve this banking crisis that has led to a prolonged and massive recession. With a large fraction of non-performing loans, a reduced capital base and substantially lower liquidity the banking sector has dramatically reduced new lending activity and provoked a huge credit crunch.

Keywords: Incentive Effect; Bank Manager; Loan Loss; Banking Crisis; Closure Rule (search for similar items in EconPapers)
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-28814-0_3

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DOI: 10.1057/9780230288140_3

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