For the first time in 24 years not one company listed on Japan's stock markets went bankrupt, Teikoku Data Bank figures for 2014 show, a sign that Prime Minister Shinzo Abe's effort to spur the economy, dubbed Abenomics, is working for companies in capital markets.
The first arrow of Abe's three-pronged effort to drag Japan out of two decades of deflation – monetary stimulus – saw the Bank of Japan unveil a massive stimulus package in 2013 that would increase its monetary base at an annual pace of 60-70 trillion yen. In October, it expanded its monetary stimulus, and the effort appears to be paying off.
"The massive quantitative easing expanded the monetary base – and encouraged banks to extend lending to smaller, struggling listed companies," said Takuya Ishida, analyst for credit research firm Teikoku Data Bank.
Banks rolling in cash
Japan's banks are swimming in excess funds. Collectively, they are sitting on 11 trillion yen (about $493.4 billion) of short-term assets, or what Barclays bank analyst Tamura Shinichi calls "waiting money" – excess funds the banks are looking for somewhere to park.
In addition, the government continues to back a 2008 law that directs banks to roll over lending to small and medium-sized (SMEs) businesses that request it. The scheme was originally designed to keep SMEs afloat after the global financial crisis in 2008, according to Shinichiro Kobayashi, Senior Economist at Mitsubishi UFJ Research and Consulting (MURC).