Crisis and Change in the Japanese Financial System

1. Front Matter

   Pages i-xiii

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2. The Japanese Financial System: An Introductory Overview

   1. The Japanese Financial System: An Introductory Overview

      • Takeo Hoshi, Hugh Patrick

      Pages 1-33

3. The Origins of Japan’s Banking Crisis

   1. Front Matter

      Pages 35-35

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   2. What Caused Japan’s Banking Crisis?

      • Thomas F Cargill

      Pages 37-58

   3. Causes of Japan’s Banking Problems in the 1990s

      • Kazuo Ueda

      Pages 59-81

4. Responding to Crisis

   1. Front Matter

      Pages 83-83

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   2. The Stagnant Japanese Economy in the 1990s: The Need For Financial Supervision to Restore Sustained Growth

      • Takatoshi Ito

      Pages 85-107

   3. The Reorganization of Japan’s Financial Bureaucracy: The Politics Of Bureaucratic Structure and Blame Avoidance

      • Nobuhiro Hiwatari

      Pages 109-136

   4. The Disposal of Bad Loans in Japan: The Case of the CCPC

      • Frank Packer

      Pages 137-157

   5. Bank Lending in Japan: Its Determinants and Macroeconomic Implications

      • Kazuo Ogawa, Shin-Ichi Kitasaka

      Pages 159-199

   6. The Postal Savings System, Fiscal Investment and Loan Program, and Modernization of Japan’s Financial System

      • Thomas F Cargill, Naoyuki Yoshino

      Pages 201-230

5. Financial Structure Change and the Big Bang

   1. Front Matter

      Pages 231-231

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   2. The Big Bang: Idea and Reality

      • Akiyoshi Horiuchi

      Pages 233-252

   3. The Big Bang in Japanese Securities Markets

      • Shoichi Royama

      Pages 253-276

   4. Japan’s Financial Big Bang: Its Impact on the Legal System and Corporate Governance

      • Hideki Kanda

      Pages 277-289

   5. Big Bang Deregulation and Japanese Corporate Governance: A Survey of the Issues

      • Michael S Gibson

      Pages 291-314

6. Erratum

   1. Erratum to: The Japanese Financial System: An Introductory Overview

      • Takeo Hoshi, Hugh Patrick

      Pages 322-322

7. Back Matter

   Pages 315-321

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At the start of the twenty-first century, the Japanese financial system is undergoing a major transformation. This process is spurred by a sense of crisis. Dominated by large institutions, the Japanese banking system has suffered from serious problems with non-performing loans since the early 1990s, when the Japanese stock market and urban real estate market both crashed. Delays in responding to these twin asset bubbles, by both regulatory authorities and the banks themselves, made matters worse and led to a banking crisis in late 1997 and early 1998. Not anticipating this setback, in late 1996 the Japanese government inaugurated its Big Bang of comprehensive financial deregulation designed to complete the process of creating `free, fair, and open financial markets'. Beginning in late 1998 and early 1999 the government finally embarked on a major rehabilitation of the Japanese banking system, including making available some Yen 60 trillion (approximately USD 500 billion) of government funds to recapitalize fifteen major banks, adequately fund the deposit insurance program, and write off the bad loans of nationalized or bankrupted banks. One result of this reform process is that the Ministry of Finance (MOF), which dominated Japanese financial system policy for most of the post-war period, has been stripped of most of its former regulatory powers.
The purpose of this book is to describe, analyze, and evaluate the process that is transforming the Japanese financial system. The chapters address various issues relating to the transition of the Japanese financial system from a bank-centered and relationship-based system to a competitive market-based system. Questions taken up include: Why did Japanese banks get into such serious trouble? Why has the MOF lost its immense power? How will the Big Bang's financial deregulation further change the Japanese financial system, including the huge government financial institutions and postal savings system? What are some of the broader implications of this transition?
The book is divided into three parts: Part I considers the origins of Japan's banking crisis; Part II focuses on five particularly important areas of major actual and potential changes; Part III addresses the effects of the Big Bang, including its potential systemic externalities. Taken together, this book offers an unusually up-to-date, comprehensive and thorough appraisal and evaluation of the profound changes occurring in Japan's financial system.

• Banking
• Banking Crisis
• Finance
• Financial Market
• Financial Markets
• Funds
• Investment

• University of California, USA

  Takeo Hoshi

• Columbia University, USA

  Hugh Patrick

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