Imperfect Competition and Costly Screening in the Credit Market under Conditions of Asymmetric Information

This article provides an analysis of how banks determine levels of information production when they are in imperfect competition and there is a condition of information asymmetry between borrowers and banks. Specifically, the study concentrates on information production activities of banks in duopoly where they simultaneously determine intensity of pre-loan screening as well as interest rates. The preliminary model of this paper illustrates that due to strategic complementarities between banks, banking competition can result in inferior equilibrium out of multiple equilibria and insufficient information production. Policymakers must take into account the possible adverse effects of competition-enhancing policies on information production activities.

Crowding-out and Crowding-in Effects of Government Bonds Market on Private Sector Investment (Japanese Case Study)

This paper reviews the relationship between public sector investment and private sector investment through government expenditures financed by government bonds in the Japanese economy. This study hypothesizes that deficit financing by bond issues does not crowd out private sector investment, and this finance method may crowd in. Thus the government increases bond issues and sells them in the domestic and international financial markets. This method does not affect interest rates because they are insensitive to government expenditures and they depend on interest rates levels in the international financial market more than in the domestic financial market because of globalization and integration among financial markets.

Land and labor reallocation in pre-modern Japan : a case of a northeastern village in 1720-1870

In agricultural societies, adjusting land and labor according to changes of labor endowment that result from family life cycle events is premised on making full use of resources for each farming household and for the economy as a whole. This paper examines how and how well households in pre-modern Japan reallocated land and labor, using a population register covering 150 years from 1720–1870 for a village in the Tohoku region. We find that households reacted to equalize their production factors; land-scarce households tended to acquire or rent-in land and out-migrate their kin members, while land-abundant households tended to release or rent-out land, in-migrate kin members, or employ non-kin members. Estimates suggest that more than 80% of the surplus or deficit area of land was resolved if the household rented or "sold" land. We discuss a potential underlying mechanism; namely, that the village's collective responsibility for tax payment (murauke) motivated both individual households and the village as a whole to reallocate land and labor for the efficient use of resources.