Collateral damage: Effects of the Japanese bank crisis on real activity inthe United States

The Japanese banking crisis provides a natural experiment to test whether a loan supply shock can affect real economic activity. Because the shock was external to U.S. cc-edit markets, yet connected through the Japanese bank penetration of U.S. markets, this event allows Its to identify an exogenous loan supply shock and ultimately link that shock to construction activity in U.S. commercial real estate markets. We exploit the variation across geo graphically distinct commercial real estate markets to establish conclusive ly that loan supply shocks emanating front Japan had real effects on econom ic activity in the United States, (JEL E44, F36).