NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Paying for the FILP

Takero Doi, Takeo Hoshi

NBER Working Paper No. 9385
Issued in December 2002
NBER Program(s):   CF   EFG

This paper examines the financial health of the Fiscal Investment and Loan Program (FILP) as of the end of March 2001. We study the financial conditions of FILP recipients, which include public corporations and local governments. We find many are de facto insolvent. Our estimates suggest as much as 75% of the FILP loans are bad. The expected losses are estimated to be about ?75 trillion (over 15% of GDP). We also studied the effects of the FILP reform of April 2001, which tries to introduce market discipline in allocation of FILP funds. No significant changes in financial flow are detected, yet. The financial market seems to differentiate the newly introduced FILP agency bonds, which are supposed to without government guarantee, from government guaranteed bonds. It is too early to tell, however, whether the financial market will become an effective monitor of FILP agencies.

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Document Object Identifier (DOI): 10.3386/w9385

Published: Paying for the FILP, Takero Doi, Takeo Hoshi. in Structural Impediments to Growth in Japan, Blomström, Corbett, Hayashi, and Kashyap. 2003

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