The International Transmission of Financial Shocks: The Case of Japan

American Economic Review, Vol 87, No 4, September 1997

37 Pages Posted: 3 Jun 1997

See all articles by Joe Peek

Joe Peek

Federal Reserve Banks - Federal Reserve Bank of Boston

Eric S. Rosengren

Federal Reserve Bank of Boston - Supervision and Regulation

Date Written: September 1996

Abstract

The large size of Japanese bank lending operations in the United States enables us to use U.S. banking data to investigate the extent to which the sharp decline in Japanese stock prices was transmitted to the United States via U.S. branches of Japanese parent banks, as well as to identify a supply shock to U.S. bank lending that is independent of U.S. loan demand. We find that binding risk-based capital requirements associated with the decline in the Japanese stock market resulted in a decline in commercial lending by Japanese banks in the United States that was both economically and statistically significant.

JEL Classification: G21, F34, E44

Suggested Citation

Peek, Joe and Rosengren, Eric S., The International Transmission of Financial Shocks: The Case of Japan (September 1996). American Economic Review, Vol 87, No 4, September 1997. Available at SSRN: https://ssrn.com/abstract=36583 or http://dx.doi.org/10.2139/ssrn.36583

Joe Peek

Federal Reserve Banks - Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

Eric S. Rosengren (Contact Author)

Federal Reserve Bank of Boston - Supervision and Regulation ( email )

600 Atlantic Avenue
P.O. Box 2076
Boston, MA 02210
United States
617-973-3090 (Phone)
617-973-3219 (Fax)

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