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Small Business Economics

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01.08.2013

The global financial crisis and small- and medium-sized enterprises in Japan: how did they cope with the crisis?

verfasst von: Kazuo Ogawa, Takanori Tanaka

Erschienen in: Small Business Economics | Ausgabe 2/2013

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Abstract

In this paper, we examine the nature of the shocks that hit the small- and medium-sized enterprises (SMEs) in Japan during the global financial crisis that occurred in the wake of the massive number of non-performing subprime loans in the U.S. We examine how the SMEs responded to the shocks, using the unique surveys that were conducted by the Research Institute of the Economy, Trade and Industry in 2008 and 2009. The shocks were identified as demand, supply, and financial shocks. The demand shock was the most prevalent of the shocks, while the financial shock was least frequent. The SMEs took a spectrum of measures against the demand shock by seeking help from suppliers and financial institutions. We find that the measures taken by the SMEs crucially depended on the bank–firm relationship as well as the customer–supplier relationship. The bank-dependent SMEs asked their closely-affiliated financial institutions for help, while the SMEs less dependent on financial institutions sought help primarily from their suppliers. A long customer–supplier relationship plays an important role in mitigating the supply shock.

Vorheriger Artikel Productivity, wages and intrinsic motivations

Nächster Artikel Inherited corporate control and returns on investment

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By contrast, longer relationships could create an informational monopoly, and hold the SMEs up, not by providing additional support but by charging higher costs because the SMEs have difficulty in switching to new supporters.

For example, see Sims (1986), Bernanke (1986), Blanchard and Quah (1989), and Gali (1999).

See Aoki and Patrick (1994) and Hoshi and Kashyap (2004) for a comprehensive overview of main bank system in Japan.

See, e.g., Albertazzi and Marchetti (2010), Blaes (2011), Bonaccorsi di Patti and Sette (2012), Cornett et al. (2011), Gambacorta and Marques-lbanez (2011), Del Giovane et al. (2011), and Ivashina and Scharfstein (2010) for empirical investigations of bank loan supply in the recent global financial crisis.

See Uesugi et al. (2009) for a comprehensive summary of the survey results.

Question 28 in the 2008 survey asks for the respondent firm name of the firm’s main and second banks (financial institutions with the second-largest loan outstanding) as well as for the length of the business relationship with those banks.

Subscript i indicates i-th firm.

To ensure the robustness of our results, we removed from our sample observations with extreme values that are defined as those for which the variables other than binary variables have a value >4 standard deviations from the average value.

One might argue that multivariate probit is an appropriate estimation method, taking into account multiple reactions to a certain shock by the firms. As a preliminary step, we estimate the response functions vis-à-vis customers and suppliers jointly by bivariate probit. It turns out that the estimation results by bivariate probit were essentially the same as those by probit, so that we adopt probit in the subsequent analysis.

The marginal effects for the third and fourth group are available from the authors upon request.

As an alternative measure of the bank–firm relationship, we classified the firms into four groups of firms, based on the loan ratio of the main and second banks. We then repeated the estimation exercise above for each firm group. We could not detect any association in the pattern of the measures taken by the SMEs in response to shocks with the bank–firm relationship defined by the loan ratio. The full estimation results are available from the authors upon request.

In other words, we estimate the linear probability model in the first step.

The MAINBDEPEND variable is a dummy variable that equals one when the respondent firm asks its main bank for help in the event of a temporary shortage of funds, and zero otherwise. The SUPPLYMDEPEND variable is a dummy variable that equals one when the respondent firm asks its main supplier for help in the event of a temporary shortage of funds, and zero otherwise. These two variables are constructed from question 13 of the 2008 survey. The MONOP1 variable is a dummy variable that equals one when the respondent purchases intermediate goods from only their main supplier, and zero otherwise. This variable is constructed from question 10 of the 2008 survey. The MONOP2 variable is a dummy variable that equals one when the supplier sells intermediate goods to only the respondent firm, and zero otherwise. This variable is constructed from question 11 of the 2008 survey. The OWNERSHIP variable is taken from question 2 of the 2008 survey. The SUPPLIERMEET variable comes from question 8 of the 2008 survey. The variables BANKDISTANCE1 and BANKDISTANCE2 are obtained from question 28 of the 2008 survey. The variables of SUPPLMSIZE1 to SUPSIZE5 are available in question 9 of the 2009 survey.

See Rivers and Vuong (1988) for details of the endogeneity test. Wooldridge (2002) provides a good exposition about this approach in pp. 472–478.

Albertazzi, U., & Marchetti, D. (2010). Credit supply, flight to quality and evergreening: An analysis of bank–firm relationships after Lehman, Working paper.

Aoki, M., & Patrick H. T. (1994). The Japanese main bank system: Its relevance for developing and transforming economies, New York: Oxford University Press.

Bernanke, B. S. (1986). Alternative explanations of the money-income correlation. Carnegie-Rochester Conference Series on Public Policy, 25(1), 49–99.CrossRef

Blaes, B. (2011). Bank-related loan supply factors during the crisis: An analysis based on the german bank lending survey, Working paper.

Blanchard, O. J., & Quah, D. (1989). The dynamic effects of aggregate demand and supply disturbances. American Economic Review, 79, 655–673.

Bonaccorsi di Patti, E., & Sette, E. (2012). Bank balance sheets and the transmission of financial shocks to borrowers: Evidence from the 2007–2008 crisis, Working paper.

Bricongne, C., Fontagné, L., Gaulier, G., Taglioni, D. & Vicard, D. (2012). Firms and the global crisis: French exports in the Turmoil. Journal of International Economics, 87, 134-146.

Carvalho, D., Ferreira, M., & Matos, P. (2011). Lending relationships and the effect of bank distress: Evidence from the 2007–2008 financial crisis, Working paper.

Chor, D., & Manova K. (2011). Off the cliff and back? credit conditions and international trade during the global financial crisis (Forthcoming). Journal of International Economics.

Cornett, M., McNutt, J., Strahan, P., & Tehranian, H. (2011). Liquidity risk management and credit supply in the financial crisis. Journal of Financial Economics, 101, 297–312.CrossRef

Cotugno, M., Monferrà, S., & Sampagnaro, G. (2011). Relationship lending, hierarchical distance and credit tightening: Evidences from the 2007 to 2009 financial crisis, Working paper.

Coulibaly, B., Sapriza, H., & Zlate, A. (2011). Trade credit and international trade during the 2008–2009 Global Financial Crisis, Working paper.

De Mitri, S., Gobbi, G., & Sette E. (2012). Relationship lending in a financial turmoil, Working paper.

Del Giovane, P., Eramo, G., & Nobili, A. (2011). Disentangling demand and supply in credit developments: A survey-based analysis for Italy. Journal of Banking and Finance, 35, 2719–2732.CrossRef

Gali, J. (1999). Technology, employment, and the business cycle: Do technology shocks explain aggregate fluctuations? American Economic Review, 89, 249–271.CrossRef

Gambacorta, L., and Marques-Ibanez D. (2011). The bank lending channel: Lessons from the crisis, Working paper.

Hoshi, T., & Kashyap, A. (2004). Corporate financing and governance in Japan: The road to the future, Cambridge: MIT Press.

Ivashina, V., & Scharfstein, D. (2010). Bank lending during the financial crisis of 2008. Journal of Financial Economics, 97, 319–338.CrossRef

Puri, M., Rocholl, J., & Steffen, S. (2011). Global retail lending in the Aftermath of the US financial crisis: Distinguishing between supply and demand effects. Journal of Financial Economics, 100, 556–578.CrossRef

Rivers, D., & Vuong, Q. (1988). Limited information estimators and exogeneity tests for simultaneous probit models. Journal of Econometrics, 39, 347–366.CrossRef

Sims, C. A. (1986). Are forecasting models usable for policy analysis? Quarterly Review of Federal Reserve Bank of Minneapolis, Winter, pp. 2–16.

Uesugi, I., Uchida, H., Ogura, Y., Ono, A., Peng, X., Turuta, D., Nemoto, T., Hirata, H., Yasuda, Y., Yamori, N., Watanabe, W., & Hotei, M. (2009). The current status of SME financing under the financial crisis: A summary of the survey on the status of transactions between businesses and financial institutions (Feb 2008) and the survey on the status of transactions between businesses and financial institutions following the financial crisis (Feb 2009), Research Institute of Economy, Trade and Industry, DP 09-J-020 (in Japanese).

Wooldridge, J. M. (2002). Econometric analysis of cross section and panel data. Cambridge: The MIT Press.

Titel: The global financial crisis and small- and medium-sized enterprises in Japan: how did they cope with the crisis?
verfasst von: Kazuo Ogawa
Takanori Tanaka
Publikationsdatum: 01.08.2013
Verlag: Springer US
Erschienen in: Small Business Economics / Ausgabe 2/2013
Print ISSN: 0921-898X
Elektronische ISSN: 1573-0913
DOI: https://doi.org/10.1007/s11187-012-9434-z

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