Capital Market and Business Cycle

• Project/Area Number: 07403001
• Research Category: Grant-in-Aid for Scientific Research (A)
• Allocation Type: Single-year Grants
• Section: 一般
• Research Field: Public finance/Monetary economics
• Research Institution: KYOTO UNIVERSITY
• Principal Investigator: TACHIBANAKI Toshiaki Institute of Economic Research, Kyoto University Professor, 経済研究所, 教授 (70112000)
• Co-Investigator(Kenkyū-buntansha): TERUYAMA Hiroshi Institute of Economic Research, Kyoto University Assistant Professor, 経済研究所, 助教授 (30227532) ; MORIMUNE Kimio Institute of Economic Research, Kyoto University Professor, 経済研究所, 教授 (20109078) ; ARIGA Kenn Institute of Economic Research, Kyoto University Professor, 経済研究所, 教授 (60159506)
• Project Period (FY): 1995 – 1996
• Project Status: Completed (Fiscal Year 1996)
• Budget Amount: ¥20,100,000 (Direct Cost: ¥20,100,000); Fiscal Year 1996: ¥5,800,000 (Direct Cost: ¥5,800,000); Fiscal Year 1995: ¥14,300,000 (Direct Cost: ¥14,300,000)
• Keywords: Intercorporate shareholding / Corporate governance / Main bank system / Distress and Bank / Yen-dollar rate / Money demand / バブル経済 / 資産価格決定論 / 現代景気循環論

Research Abstract

The purpose of this project was to study the relationship between capital market and business cycles both theoretically and empirically. We found several inteersting results in understanding the effect of capital market on the performance of business cycles. Following are some of the results.
First, intercorporate shareholding has some positive effect on the increase in productivity of firms. However, it has a negative effect because it obscures the management of firms.
Second, intercorporate shareholding by financial institutions implies that no institutions monitor the management of financial firms. Thus, it is possible that it lowered the efficiency of financial firms greatly.
Third, the main bank system lowers the probality of bankruptcy of firms certainly. It does not imply, however, that the main bank system is the only reason for the lower rate of bankruptcy of firms. It helps, nevertheless, the rescue activity of these troubled firms.
Fourth, the main bank system is explained by "insurance principle." Although it is important, we have to add another principle such that renegotiating activity between a bank and a firm helps the reason for the main bank system.
Firth, liquidation effect was observed in the Japanese capital market. In particular, the yen-dollar exchange rate in Japan is influenced by it unlike the U.S.
Sixth, money demand function is estimated by co-integration technique. It was found that the estimation method is important to draw the implication.