Discussion Papers 2018

CIRJE-F-1079

"Interlinked Transactions under Tenancy System: A Case from Meiji Japan"

Author Name

Kojima, Yohei

Date

March 2018

Full Paper

Remarks

Abstract

This study investigates the interlinked transactions conducted by a landlord who had a money lending business in a local community in Meiji Japan. Contrary to the theoretical assumption, interlinked transactions did not have the effect of preventing debt default, mainly due to the existence of fixed-rent tenancy contracts with state-contingent rent reduction. Because landlords needed to enhance their own bargaining power in anticipation of rent reduction requests, even high-risk tenants could receive loans from their landlords and were allowed to repay in arrears, whereas it made it difficult for tenants to discount the rent amount in lean years.