The number of corporate bankruptcies dropped 2.06 percent from a year earlier to 1,041 in January, the 18th straight month of decline, as government financial aid apparently kept many businesses afloat, a credit research firm said Tuesday.
The debts left by the failed firms plunged 90.91 percent to ¥236.40 billion, the third straight monthly drop, as their year-earlier figure was inflated by the bankruptcies of heavily indebted Japan Airlines Corp. and its two group firms, according to Tokyo Shoko Research.
By industry sector, failures of manufacturers increased for the first time in 17 months to 164 and those of real estate firms climbed to a one-year high of 53. The figure for retailers rose for the second consecutive month to 145.
Major bankruptcies accompanied by debts of ¥10 billion or more totaled two. But companies that went under with debts of less than ¥100 million accounted for 67.3 percent of total corporate failures, indicating tough going for smaller businesses.
Teikoku Databank, another private credit research firm, said companies that went bankrupt in January increased 2.8 percent to 976, with their debts totaling ¥249.68 billion, down 90.4 percent.
The surveys by the two firms cover failures of businesses with ¥10 million or more in debts. The report by Teikoku Databank covers only corporate failures filed with courts.
Loan balance drops
The average daily balance of bank lending fell 1.9 percent in January from a year earlier to ¥393.86 trillion, down for the 14th consecutive month amid continuing weak corporate demand for funds, the Bank of Japan said Tuesday.
After adjustment for special factors — loan securitization, exchange rate fluctuations and the allocation of loan-loss reserves — the loan balance dropped 1.6 percent, the BOJ said in a preliminary report.
The loan balance of major commercial banks, which have nationwide networks, and trust banks fell 4.5 percent to ¥198.33 trillion. That of regional banks edged up by 0.8 percent to ¥195.52 trillion.
The overall lending balance, including loans by “shinkin” cooperative banks, fell 1.8 percent to ¥456.63 trillion, down for the 14th straight month.
“Companies’ demands for capital spending funds and operating money remain weak,” a BOJ official said.
The balance of commercial paper, or short-term debt issued by companies, dropped 8.6 percent to ¥9.9 trillion in January.
In separate data released by the BOJ, the country’s benchmark money supply rose 2.3 percent in January from a year earlier, keeping the uptrend since 1993 as companies continued to prefer to keep cash on hand as they have recently seen recovery in profits, another BOJ official said.
The average daily balance of M2, which consists of cash in circulation, demand and time deposits as well as certificates of deposit at domestic banks, stood at ¥784.5 trillion.
The wider M3 gauge grew 1.8 percent to ¥1.085 quadrillion, rising from ¥1.083 quadrillion the previous month. M3 is M2 plus deposits at postal banks and other types of financial institutions.
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