Land as Production Input and Collateral: Land Investment By Japanese Firms

Posted: 11 Sep 2007

See all articles by Toshitaka Sekine

Toshitaka Sekine

Hitotsubashi University - Graduate School of Economics

Towa Tachibana

Kobe University

Abstract

Is the collateral role an empirically important determinant of investment in land? We study what has determined the land investment by Japanese firms since the 1990s, after the collapse of the asset-price bubble. With a large panel data set, we estimate nonlinear land-investment functions and calculate q for land assets. The estimates confirm the dual roles of land assets: production inputs and collateral. Firms sold land assets in response to the decline in their sales and the deterioration in financial conditions. Partial q for land assets was generally below one during the period.

Keywords: land investment, collateral value of land, friction model, multiple q

JEL Classification: E22, G12, R30, C24

Suggested Citation

Sekine, Toshitaka and Tachibana, Towa, Land as Production Input and Collateral: Land Investment By Japanese Firms. Journal of Real Estate Finance and Economics, Vol. 35, No. 4, 2007, Available at SSRN: https://ssrn.com/abstract=1010398

Toshitaka Sekine (Contact Author)

Hitotsubashi University - Graduate School of Economics ( email )

Naka 2-1
Kunitachi, Tokyo 186-8601
Japan

Towa Tachibana

Kobe University ( email )

2-1, Rokkodai-cho, Nada-ku
Kobe, 657-8501, 657-8501
Japan

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