| Description |
1 online resource (29 pages) |
| Series |
IMF working paper, 2227-8885 ; WP/04/86 |
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IMF working paper ; WP/04/86.
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| Contents |
""Contents""; ""I. INTRODUCTION""; ""II. DEVELOPMENTS OF JAPAN�S DISTRESSED-DEBT MARKET""; ""III. FAILURE OF MAIN BANK SYSTEM""; ""IV. CAUSES OF PRICE MISMATCHES IN SUBPERFORMING LOAN MARKET""; ""V. POLICY SUGGESTIONS""; ""APPENDIX I""; ""APPENDIX II""; ""REFERENCES"" |
| Summary |
Sizable risk capital from outside may be necessary to accelerate Japan's corporate restructuring to replace the stock of impaired bank loans. To attract risk capital, impaired loans must find market-clearing prices. However, the asymmetry in the bid-ask prices faced by banks and distressed-debt investors continues to stall efforts to create a liquid distressed-debt market. This paper asserts that the wedge between the prices faced by different participants is primarily a result of different valuation methods employed by banks and distressed-debt investors. On the one hand, banks do not recognize "maturity default" that results in banks rolling over impaired-loan accounts, effectively turning them into perpetual debt, which is expected to capture any upside potential for value. On the other hand, distressed-debt investors presently view their investments as equity stakes that require improved cash flows, unlike the buy-and-sell distressed-collateral market that existed in the mid-1990s. We suggest that bids from distressed-debt investors may not be as low as they are deemed by local banks and the asymmetry in prices may be reduced if banks value their claims as corporate equity |
| Bibliography |
Includes bibliographical references |
| Notes |
Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. http://purl.oclc.org/DLF/benchrepro0212 MiAaHDL |
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digitized 2010 HathiTrust Digital Library committed to preserve pda MiAaHDL |
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Print version record |
| Subject |
Bank loan -- Japan
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Corporate debt -- Japan
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Bank failures -- Japan
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Bank loans -- Japan
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Bank loans
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Bank failures
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Corporate debt
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Japan
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| Form |
Electronic book
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| Author |
Manmohan Singh (Economist), author
|
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International Monetary Fund. International Capital Markets Department, issuing body.
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| ISBN |
1451896980 |
|
9781451896985 |
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1281303879 |
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9781281303875 |
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9781451850918 |
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1451850913 |
| ISSN |
2227-8885 |
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