Bank of Japan Extends Corporate Funding

The U.S. isn’t the only country in the world extending special funding to companies hard hit by the financial crisis. Britain and Japan are, too. And the Bank of Japan just voted to continue its program of buying commercial paper and corporate bonds from banks — as well as keeping long-term loan rates to banks at 0.1% interest. These measures are similar to those adopted by the U.S. recently to help keep capital flowing. Forbes has some information on why the program has been extended :

Although funding conditions for big companies improved for the first time in eight quarters, small firms were struggling to gain access to credit , the bank’s tankan corporate survey showed earlier this month.

This situation probably appears familiar to many here in the U.S. Things are improving for the big banks, which are reporting solid earnings (led by Goldman Sachs ). However, business funding is still a little difficult to come by for small businesses, and that is putting a general crimp in one very vital part of the economy .

The Bank of Japan hopes that it will be able to phase out its program by September, when the current extension expires. But the door is also open for more help from the central bank should the Japanese economy need it.

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