The Interplay Between Problem Loans and Japanese Bank Productivity

49 Pages Posted: 4 Apr 2019

See all articles by Emmanuel Mamatzakis

Emmanuel Mamatzakis

University of Sussex - School of Business, Management and Economics

Roman Matousek

Nottingham University Business School

Anh N. Vu

University of Sussex - School of Business, Management and Economics

Date Written: March 1, 2019

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

JEL Classification: D24, G21, C33

Suggested Citation

Mamatzakis, Emmanuel and Matousek, Roman and Vu, Anh N., The Interplay Between Problem Loans and Japanese Bank Productivity (March 1, 2019). Available at SSRN: https://ssrn.com/abstract=3345060 or http://dx.doi.org/10.2139/ssrn.3345060

Emmanuel Mamatzakis (Contact Author)

University of Sussex - School of Business, Management and Economics ( email )

Falmer, Brighton BN1 9SL
United Kingdom

Roman Matousek

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

Anh N. Vu

University of Sussex - School of Business, Management and Economics ( email )

Falmer, Brighton BN1 9SL
United Kingdom

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