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Abstract

Vol. 52, No. 1, pp. 2-15 (2001)

“Fiscal Investment and Loan Program -A Perspective on Government Interventions in the Japanese Financial Sector-”
Yasushi Iwamoto (The Institute of Economic Research, Kyoto University)

This paper surveys the recent economic analyses of the Fiscal Investment and Loan Program (FILP). In the progress of financial deregulation, justification of the activities of FILP was boiled down to two points : bearing risk too large for the private sector, and the presence of imperfect information in the credit market. Why direct finance by public financial institutions is desirable remains unanswered. The choice of alternative means should be more intensively addressed. Future empirical research on small and medium-size business finance should be more closely related to the theoretical analysis of the credit market with asymmetric information.