Network-Motivated Forbearance Lending

This paper is a result of research of the Study Group on Dynamics of Corporate Finance and Corporate Behavior at the Research Institute of Economy, Trade and Industry (RIETI) in Tokyo, Japan. It is a spin-off from the working papers previously circulated with the titles “Network-motivated Lending Decisions” (RIETI Discussion Paper 15E057) and “Network-motivated Lending Decisions: A Rationale for Forbearance Lending” (Working Paper No. 127, Institute of Economic Research, Seoul National University). The authors are grateful for the insightful comments of Agostino Capponi (department editor), an associate editor, anonymous referees, Kosuke Aoki, Salvatore Capasso, Hans Degryse, Kyota Eguchi, Shin’ichi Fukuda, Masaharu Hanasaki, Takeo Hoshi, Kaoru Hosono, Masami Imai, Hideshi Ito, Keiichiro Kobayashi, Teruyoshi Kobayashi, Yoshinori Kon, Hideaki Miyajima, Daisuke Miyakawa, Hisashi Nakamura, Makoto Nirei, Yuta Ogane, Arito Ono, Gabriele Sampagnaro, Hiroo Sasaki, Etsuro Shioji, Yasunobu Tomoda, Hirofumi Uchida, Greg Udell, Ken’ichi Ueda, Iichiro Uesugi, Yukihiro Yasuda, Alberto Zazzaro, and other participants in the workshops at Chuo University, Development Bank of Japan, Financial Sevice Agency Institute, Hitotsubashi University, Hokkaido University, Kobe University, KU Leuven, Osaka University, RIETI, Waseda University, Yokohama National University, and University of British Columbia, and those in the sessions at the Western Economic Association International 10th Biennial Pacific Rim Conference, the 2015 Japanese Economic Association Fall Meeting, 2016 American Economic Association meeting, 2016 Financial Intermediation Research Society, and Third Sydney Banking and Financial Stability Conference in 2019.