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Identifier to cite or link to this item: https://hdl.handle.net/10086/15208

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Title	Firm Age and the Evolution of Borrowing Costs: Evidence from Japanese Small Firms
Creator	Creator Name Sakai, Koji Sakai, Koji 坂井, 功治坂井, 功治サカイ, コウジサカイ, コウジ Affiliation Affiliation Name Hitotsubashi University
	Creator Name Uesugi, Iichiro Uesugi, Iichiro 植杉, 威一郎植杉, 威一郎ウエスギ, イイチロウウエスギ, イイチロウ Affiliation Affiliation Name Hitotsubashi University
	Creator Name Watanabe, Tsutomu Watanabe, Tsutomu 渡辺, 努渡辺, 努 Affiliation Affiliation Name Hitotsubashi University
Editor	Contributor Name 世代間問題研究プロジェクト（世代間問題の経済分析） = Economic Analysis of Intergenerational Issues, Project on Intergenerational Equity
Editor	Contributor Name 一橋大学経済研究所世代間問題研究機構 = Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University
Key Word	firm age
	borrowing cost
	selection
	credit allocation
	reputation
JEL	D82
	D83
	E43
	G21
	G30
	L25
Abstract	This paper investigates how a firm's borrowing cost evolves as it ages. Using a new data set of more than 200,000 bank-dependent small firms for 1997-2002, we find the following. First, the distribution of borrowing costs tends to become less skewed to the right over time, which can be partially attributed to "selection" (i.e., exits of defaulting firms reduce the total borrowing costs), but is mainly explained by "adaptation" (i.e., surviving firms' borrowing costs decline as they age). Second, the selection process is natural in that firms with lower quality are separated, charged higher borrowing costs, and eventually forced to exit, which contrasts with the results of previous studies on Japan's credit misallocations, such as Peek and Rosengren (2005). Third, in the adaptation process, we find an age dependence of firms' borrowing costs even if we control for firm size.
Description	First Draft: September 6, 2005; This Version: February 13, 2008
Publisher	Institute of Economic Research, Hitotsubashi University
Issued Date	2008-03
Language	English(eng)
Resource Type	technical report
Version Type	VoR
Is Part OfRelation -	Related Title PIE/CIS Discussion Paper ; No. 354
Number of Pages	32
Sponsorship	科学研究費補助金（特別推進研究） = Grant-in-Aid for Specially Promoted Research
Appears in Collections	PIE/CIS Discussion paper
URL	https://hdl.handle.net/10086/15208