CREDIT RATIONING AND PUBLIC-HOUSING LOANS IN JAPAN

Japanese Public Corporations (PCs) provide low-interest housing mortga ges. However, some households are credit rationed, limiting their acce ss to the PC loan market. Rationed households borrow from commercial b anks when debt demand exceeds PC credit limits. Therefore, commercial bank lending is dependent on how many households are rationed in the P C loan market and to what extent. This is calculated by estimating loa n demand and credit constraint functions separately, which produces un biased estimates. The results suggest that most buyers are unrationed in the PC loan market, showing that the PCs tend to crowd out private residential lending in Japan. (C) 1996 Academic Press, Inc.