The paper examines the international transmission of financial shocks, focusing on the impact of the dramatic decline in Japanese stock prices on U.S. bank lending. The authors use U.S. banking data to investigate how this domestic financial shock affected the United States and identified a supply shock to U.S. bank lending independent of U.S. loan demand. They find that the decline in Japanese stock prices led to a significant reduction in commercial lending by Japanese banks in the U.S., which was both economically and statistically significant. This finding is particularly important given the severe real estate loan problems currently facing Japanese banks. The study also highlights the potential implications for credit availability in the United States and other countries with significant Japanese bank presence. The authors control for various factors, including foreign direct investment and employment growth, to isolate the supply shock effect. The results are robust across different estimation techniques and adjustments to the dependent variable, confirming the significant impact of Japanese parent bank capital on U.S. branch lending.The paper examines the international transmission of financial shocks, focusing on the impact of the dramatic decline in Japanese stock prices on U.S. bank lending. The authors use U.S. banking data to investigate how this domestic financial shock affected the United States and identified a supply shock to U.S. bank lending independent of U.S. loan demand. They find that the decline in Japanese stock prices led to a significant reduction in commercial lending by Japanese banks in the U.S., which was both economically and statistically significant. This finding is particularly important given the severe real estate loan problems currently facing Japanese banks. The study also highlights the potential implications for credit availability in the United States and other countries with significant Japanese bank presence. The authors control for various factors, including foreign direct investment and employment growth, to isolate the supply shock effect. The results are robust across different estimation techniques and adjustments to the dependent variable, confirming the significant impact of Japanese parent bank capital on U.S. branch lending.