Abstract
This study presents an empirical analysis to detect Minsky’s financial fragility and its determinants in the non- financial sectors in Japan, with particular attention paid to differences between sectors and sizes. While Minsky developed theoretical analyses of financial fragility for use in economic growth models, its empirical application is limited. Based on the financial fragility indices derived from a cash flow accounting framework and Minsky’s margins of safety, I detect the overall configuration and evolution of financial fragility (hedge, speculative, and Ponzi) in Japan. Then, the factors that determine the probability of being Ponzi finance are detected by using panel logistic regression. In doing so, this study reveals that although speculative finance is dominant in many sectors, the evolution of financial fragility is diversified and its determinants differ according to sector and size in Japan.
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