Study group on corporate finance and firm dynamics

In response to the massive economic shocks caused by the increase of COVID-19 cases, the Japanese government has provided various types of subsidies and loans to firms, especially to SMEs, to alleviate their financial distress. These financial assistance measures include loans by government-affiliated financial institutions and loans that are 100% guaranteed by the credit guarantee corporations. These policy measures were, on the one hand, successful in reducing the number of bankruptcies and mitigating the financial distress of firms. On the other hand, they may have resulted in the debt overhang, in which firms are unable to obtain new loans and finance their positive net present value projects due to the continued presence of past loans. Further, they may have increased the number of firms that need to simultaneously restructure their debt and their businesses.

This research project undertakes a survey for firms and examines the development of their activities and financing since the emergence of the COVID-19 crisis. Using the data collected by the survey, it investigates characteristics of firms that have applied for the government’s financial assistance measures. The project also focuses on the firms’ business and debt restructuring activities and examines their determinants and their impact on firms’ ex-post performance.

November 1, 2021 - April 30, 2024

(During the research project period, the research activity period is set from November 1, 2021 to October 31, 2023, and the data usage reporting period is set from November 1, 2023 to April 30, 2024.)