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Japan's banks see record pace of lending growth
By Tetsushi Kajimoto |
January 14, 2009, Wednesday
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Print Edition
Print Edition
JAPANESE bank lending grew at a record pace in December from a year earlier as companies, shut out from raising funds in markets, grabbed cash from their bankers amid a global recession.
The plunge in overseas demand and subsequent collapse in Japanese industrial output are paralyzing the country's export-oriented economy.
With many countries in recession and growth slowing in other emerging markets, many economists expect fund-raising difficulties to persist and even strengthen should the global economy deteriorate even further.
"Corporate executives are very worried because their cash flow is clearly dwindling," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.
"Corporate managers have recently been gossiping a lot about things like 'such-and-such a company that's had no debt went to the bank just in case.' That kind of talk is fuelling their worries," Kumano added.
Lending by Japanese banks rose 3.7 percent in December from a year earlier, the largest increase since the Bank of Japan started publishing data in 2000 and faster than 3.2 percent in November.
The country's biggest banks raised their lending 4.2 percent, the largest rise since December 1991.
Borrowers have been turning to banks as rates on new commercial paper have jumped and issuing corporate bonds has become difficult for firms with low credit ratings, while companies are feeling the pinch from the economic slump.
Outstanding commercial paper issued in Japan fell 15 percent in December from a year earlier, the biggest fall in nearly two years.
The plunge in overseas demand and subsequent collapse in Japanese industrial output are paralyzing the country's export-oriented economy.
With many countries in recession and growth slowing in other emerging markets, many economists expect fund-raising difficulties to persist and even strengthen should the global economy deteriorate even further.
"Corporate executives are very worried because their cash flow is clearly dwindling," said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.
"Corporate managers have recently been gossiping a lot about things like 'such-and-such a company that's had no debt went to the bank just in case.' That kind of talk is fuelling their worries," Kumano added.
Lending by Japanese banks rose 3.7 percent in December from a year earlier, the largest increase since the Bank of Japan started publishing data in 2000 and faster than 3.2 percent in November.
The country's biggest banks raised their lending 4.2 percent, the largest rise since December 1991.
Borrowers have been turning to banks as rates on new commercial paper have jumped and issuing corporate bonds has become difficult for firms with low credit ratings, while companies are feeling the pinch from the economic slump.
Outstanding commercial paper issued in Japan fell 15 percent in December from a year earlier, the biggest fall in nearly two years.
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