Japan has experienced a deep and prolonged banking crisis in the 1990s. In this paper we attempt to identify the characteristics of companies which have the most to lose from the banks’ malaise. Using stock price data, we calculate abnormal returns of non-financial companies around significant dates in the history of the banking crisis, starting in 1995. The events we study include various gove...

VAR analysis on a measure of bank lending standards collected by the Federal Reserve reveals that shocks to lending standards are significantly correlated with innovations in commercial loans at banks and in real output. Credit standards strongly dominate loan rates in explaining variation in business loans and output. Standards remain significant when we include various proxies for loan demand...

Critics claim that capital requirements can exacerbate credit cycles by restricting lending in an economic downturn. The introduction of Basel 2, in particular, has led to concerns that risksensitive capital charges are highly correlated with the business cycle. The Basel Committee is contemplating a revision of the Basel Accord by introducing counter-cyclical capital buffers. Others claim that...

We study the implications of bank lending for the term structure. Specifically, we consider how resources are optimally allocated between a banking sector and a risky sector. To do so, we use a “two trees” framework with a risky and risk free sector, in which capital moves sluggishly between the two. We characterize equilibrium and illustrate how financial flexibility affects the term structure...

This paper analyzes the linkages between credit supply conditions and bank lending. Building on the recent work of Gilchrist and Zakraǰsek [2011], we use the excess bond premium—a component of corporate credit spreads designed to measure shifts in the risk attitudes of financial intermediaries—to empirically identify credit supply shocks. Our results indicate that shocks to the excess bond prem...

ABBREVIATIONS ADB – Asian Development Bank AR – Appraisal Report AusAID – Australian Agency for International Development EIRR – Economic Internal rate of return EPC – Electric Power Corporation of Samoa EU – European Union FEA – Fiji Electricity Authority FIRR – Financial Internal rate of return GDP – Gross domestic product IES – Impact Evaluation Study KAJUR – Kwajalein Atoll Joint Utility Re...