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Intensified lending competition and search-for-yield under prolonged monetary easing

Yoshiaki Ogura ()

Journal of the Japanese and International Economies, 2020, vol. 56, issue C

Abstract: We present a structural estimation of regionally heterogeneous demand elasticity and the degree of competition in Japanese local loan markets under prolonged monetary easing. Our estimates show that lending competition intensifies in markets where banks hold more slack liquidity caused by monetary easing, and where loan demand is less elastic against lowering interest rates due to a rapidly aging population. We also find evidence for “search-for-yield”, i.e., banks in more competitive markets are driven to extend riskier loans.

JEL-codes: E51 G21 L11 (search for similar items in EconPapers)
Date: 2020
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Chapter: Intensified Lending Competition and Search-for-Yield under Prolonged Monetary Easing (2019)
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DOI: 10.1016/j.jjie.2020.101076

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