Priority Rule Violations and Perverse Banking Behaviors: Theoretical Analysis and Implications of the 1990s Japanese Loan Markets

Ebook Details

Authors

Hiroyuki Seshimo, Fukuju Yamazaki

Year 2017
Pages 80
Publisher Springer
Language en
ISBN 9789811058516
File Size 2.01 MB
File Format PDF
Download Counter 60
Amazon Link

Ebook Description

This book theoretically and empirically explores why Japanese banks engaged in seemingly contradictory behaviors in the 1990s, namely, the credit crunch and evergreening, i.e., inefficient additional lending. A credit crunch occurs when banks are unwilling to finance good and efficient projects.  Evergreening implies that banks reluctantly lend additional money to poorly performing and financially vulnerable firms. The authors hypothesize that these practices stemmed from violation of the absolute priority rule (APR) by creditors, thus making it possible to explain this seemingly contradictory banking behavior in a consistent way.