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The interplay between problem loans and Japanese bank productivity

Emmanuel Mamatzakis, Roman Matousek and Anh Vu

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines for the first time the impact of problem loans on Japanese productivity growth. We exploit a new data set of Japanese problem loans classified into two categories: bankrupt and restructured loans. We opt for a novel and flexible productivity growth decomposition that allows to measure the direct impact of these problem loans on productivity growth. The results reveal that Japanese bank productivity growth was severely constrained by bankrupt and restructured loans early in 2000s, whilst some persistence of the negative impact of problem loans on productivity growth is observed in the late 2000s. Thereafter, there is only some partial recovery in the productivity growth from 2012 to 2015. Further, we also perform cluster analysis to examine convergence or divergence across regions and over time. We observe limited convergence, though Regional Banks seem to form clusters in some regions.

Keywords: Bank productivity; Bankrupt loans; Restructured loans; Cluster analysis; Japan (search for similar items in EconPapers)
JEL-codes: G0 G01 G2 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban and nep-eff
Date: 2019-03-14
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