The Effect of Bank Credit on Asset Prices: Evidence from the Japanese Real Estate Boom during the 1980s .

 Assignment Instructions: After reading the assigned case study and viewing the assigned videos (see below), you will complete a four to five page case analysis. You should incorporate course material and additional readings (i.e., journal articles, books, etc.) into your study to strengthen the content of your paper. The paper must be in APA format and should include a reference page citing at least two scholarly sources other than the textbook and case study. Compare historical events to contemporary situations with your case study. Your review of your case study must include the following: • Summary of the case (key players, background, etc.). • Describe the scope of the problem. • Analyze the issue/outcome and socio-economic considerations. • Evaluate whether economic history is bound to repeat. You will want to generate hypotheses to account for observed similarities. • Explain the incentives for a real-estate investment, subsequent development, community growth, and an overall economic boom to the various stakeholders. • Analyze the role credit plays in this incentive. • Evaluate the role of government in developing regulations that foster an environment of steady economic growth instead of boom-bust cycles. Your case analysis should be a minimum of four to five pages in length (excluding cover and reference page), be written in APA format, and should contain a cover page and reference page. Your case analysis: • Must be four to five double-spaced pages in length and formatted according to APA style as outlined in the Ashford Writing Center. • Must include a cover page that includes: o Title of paper o Student’s name o Course name and number o Instructor’s name o Date submitted • Must include an introductory paragraph with a succinct thesis statement. • Must address the topic of the paper with critical thought. • Must conclude with a restatement of the thesis and a conclusion paragraph. • Must use at least two scholarly resources (excluding the textbook or case study) from the Ashford University Library. Case Study: • Mora, N. (2008). The effect of bank credit on asset prices: Evidence from the Japanese real estate boom during the 1980s. Journal of Money, Credit and Banking, 40(1), 57-87. The Effect of Bank Credit on Asset Prices: Evidence from the Japanese Real Estate Boom during the 1980s. Authors: MORA, NADA1 Source: Journal of Money, Credit & Banking (Wiley-Blackwell). Feb2008, Vol. 40 Issue 1, p57-87. 31p. 10 Charts, 4 Graphs. Document Type: Article Subject Terms: *Assets (Accounting) *Bank loans *Prices *Real property *Finance Geographic Terms: Japan Author-Supplied Keywords: asset prices bank credit E44 financial regulation G21 G28 NAICS/Industry Codes: 522291 Consumer Lending 531190 Lessors of Other Real Estate Property 531210 Offices of Real Estate Agents and Brokers Abstract: This paper studies whether bank credit fuels asset prices. Financial deregulation during the 1980s allowed keiretsus to obtain finance publicly and reduce their dependence on banks. Banks that lost these blue-chip customers increased their property lending, and serve as an instrument for the supply of real estate loans. Using this instrument, I find that a 0.01 increase in a prefecture’s real estate loans as a share of total loans causes 14–20% higher land inflation compared with other prefectures over the 1981–91 period. The timing of losses of keiretsu customers also coincides with subsequent land inflation in a prefecture. [ABSTRACT FROM AUTHOR] Copyright of Journal of Money, Credit & Banking (Wiley-Blackwell) is the property of Wiley-Blackwell and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder’s express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.) Author Affiliations: 1* Nada Mora is an Assistant Professor in Economics Department, The American University of Beirut ( E-mail: ). ISSN: 0022-2879 DOI: 10.1111/j.1538-4616.2008.00104.x Accession Number: 28651498 Publisher Logo: Supplemental Reading: • Simpson, H. D. (1933). Real estate speculation and the depression. Supplement, Papers and Proceedings of the Forty-fifth Annual Meeting of the American Economic Association. The American Economic Review, 23(1), 163-171. Supplemental Video: • CNN (2012). Nevada: Housing crisis’ ground zero (Links to an external site.)Links to an external site.. Retrieved from The case study takes place between 1981 and 1991 in Japan. The main focus is on keiretsus, which is an informal type of business group or companies in Japan. As the abstract states, in 1981 in Japan due to financial deregulations, the keiretsus or a group of businesses were able to obtain money and loans from private investors rather than from a bank. Since these large companies did not obtain loans from the bank, the bank lost these big customers and had to turn to lending on real property, like houses, rather than on commercial or investment loans. The author found that this caused a 14-20% increase in property values and land values. The author also states that this is a larger cause for increased property values as compared to other regulations that occurred during 1981-1991. Continuing on, the first three bullet points of the week 3 assignment are in reference to the case study in Japan. The rest of the bullet points do not necessarily have to be about Japan. They are asking in general, if what happened to Japan with financial deregulation could happen all over again. Explain the incentives for a country and cities who invest in real estate, development and community growth. Analyze the role credit plays is asking you to analyze if the bank loans make a big deal here or if private investors can create the same real estate development as banks do. Lastly, discuss the role government plays when it comes to creating regulations that foster continued economic growth.