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The purpose of this paper is to identify two inconsistencies that are found in the third chapter of Marx’s Das Kapital, dedicated to the study of credit. In the first one Marx states that the distinction between commercial and bank credit is only nominal, but he resorts to it in order to provide an explanation for the nineteenth century crisis in England, thus implying that the distinction was not only nominal, but real. The second inconsistency is noticed between Marx’s statement that real and money capital move in opposite directions during the trade cycle (without an explanation of how it is possible), and the second book of The Capital where Marx states that capital in the form of money and real capital must move in the same directions during the business cycle.Keywords: Marx; inconsistency; bank credit; money capital.

This dissertation contains two essays that study the credit channel and ownership structure in entrepreneurial firms. In the first essay, we study the trade credit and bank credit usage among entrepreneurial firms. Even during the latest credit crunch, there is no substitution between supplier and bank lending among the young firms. The overwhelming majority of firms borrowing from suppliers have sufficient undrawn amounts in their revolving bank lines to cover their financing needs. When firms have trouble obtaining bank credit, trade credit actually declines. Therefore, supplier lending is unlikely to be the financing form of last resort. Suppliers’ lending decisions are primarily driven by a client’s sales, whereas banks’ lending decisions are not tied to firms’ financial conditions. Availability of trade credit does not help to obtain bank credit, and vice versa.In the second essay, we examine ownership structure among a panel of entrepreneurial firms. Variations in these firms’ ownership structure are overwhelmingly determined by the unobserved firm fixed effects. After we control for firm fixed effects, there is no relation between ownership structure and firm performance. More importantly, despite a lack of resale markets for their shares, these firms show substantial ownership structure changes over time, and growth potential and demand for external capital seems to be main reason why some firms dilute their ownership structure. Using both a propensity score matching method and a difference-in-difference regression method, we do not find evidence that ownership structure changes affect subsequent firm performance among our sample firms. Finally, ownership structure does not affect firms’ survival probability.

This dissertation uses both micro-level and macro-level empirical analysis to examine the role of financial institutions and the supply of credit in Japan's economy in the 1990s. Chapter II investigates the effect of the 1988 Basel Accord on Japanese bank portfolios. Analysis using a panel of Japanese bank balance sheets reveals that the new regulation led to a reduction in bank lending in response to stricter regulations on bank capital. Both domestic and international banks gradually reduced loan growth in order to increase capital ratios prior to implementation of the new capital standards. After the regulation became effective, loan growth became sensitive to capital to asset ratios for both international and domestic banks. Chapter III also focuses on individual banks, examining how institutional characteristics of Japan's banking system may have contributed to the current banking crisis. A model of bank lending behavior that incorporates these characteristics of Japan's banking sector is developed and used as the basis of an empirical investigation into lending practices in Japan. Empirical analysis demonstrates that the allocation of bank loans in Japan is sensitive to measures of financial health traditionally used by U.S. banks in evaluating potential loan recipients. Closer examination of bank lending patterns in the pre-Basel period provides evidence of a strong link between the allocation of bank loan portfolios in the 1980s and the current level of non-performing loans. In particular, the shift away from a reliance on large corporate clients and a shift into lending to small and medium enterprises seems to have contributed to the non-performing loan problem. Chapter IV links the findings in chapters II and III to the macroeconomy, investigating the effect of bank credit on real economic activity in Japan in the 1990s. Vector auto-regression (VAR) analysis contradicts the hypothesis that a credit crunch contributed to the heisei recession. However, analysis of Japan's current recession, which began in 1997, shows that there have been a series of negative shocks to bank credit in recent years. Conditional forecasts reveal that these shocks have been transmitted to the real economy, significantly affecting real economic activity.