Structural Changes in Japanese Firms: Business Dynamism in an Aging Society

40 Pages Posted: 30 Oct 2020

See all articles by Gee Hee Hong

Gee Hee Hong

International Monetary Fund (IMF)

Arata Ito

Research Institute of Economy, Trade and Industry (RIETI)

Yukiko Umeno Saito

affiliation not provided to SSRN

Anh Thi Ngoc Nguyen

International Monetary Fund (IMF)

Date Written: September 1, 2020

Abstract

The COVID-19 pandemic has posed a serious threat to the survival of Japanese firms, highlighting the importance of understanding how and why firms exit. In this paper, we use a rich firm-level dataset of Japanese firms to document how firm exit patterns have evolved between 2007 and 2017. Firm exit patterns have been heavily influenced by Japan's demographic trends, as a majority of exits in recent years were voluntary exits of firms (business closures) owned by CEOs aged 65 years or older without business successors. In contrast to this increase in voluntary exits, other 'traditional' firm exits (such as bankruptcies), have declined. These findings underscore the importance of addressing business transition issues in a rapidly aging society.

Keywords: Aging, Small and medium enterprises, Manufacturing, Interest payments, Demographic change, WP, zombie firm, graphic tag0, exit rate, partner company, consumer company

JEL Classification: D22, G33, L10, L14, R11, J14, G30, L60, F34, J11

Suggested Citation

Hong, Gee Hee and Ito, Arata and Saito, Yukiko Umeno and Nguyen, Anh Thi Ngoc, Structural Changes in Japanese Firms: Business Dynamism in an Aging Society (September 1, 2020). IMF Working Paper No. 20/182, Available at SSRN: https://ssrn.com/abstract=3721207

Gee Hee Hong (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Arata Ito

Research Institute of Economy, Trade and Industry (RIETI) ( email )

1-3-1 Kasumigaseki
Chiyoda-ku
Tokyo 100-8901
Japan

Yukiko Umeno Saito

affiliation not provided to SSRN

No Address Available

Anh Thi Ngoc Nguyen

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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