How to Determine the Lending Level of the Bank to the Firm?
Financial institutions (banks, insurance firms, securities firms, and so on) are regulated by laws, decrees, or guidance due to their significant economic influence. Therefore, regulators such as the Financial Agency in Japan are always concerned about implementing effective regulations and the means to enforce them on financial institutions. Such regulations include measures to prevent a credit crunch. The Japanese economy experienced several crises in the past 20 years, and banks have implemented screening that makes it very hard for firms to obtain loans.
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