1994 Fiscal Year Final Research Report Summary
Historical and Tehoretical Analysis of the Stability of the Japanese Financial System
| Project/Area Number |
05630059
|
|---|
| Research Category |
Grant-in-Aid for General Scientific Research (C)
|
| Allocation Type | Single-year Grants |
|---|
| Research Field |
Public finance/Monetary economics
|
|---|
| Research Institution | Waseda University |
|---|
Principal Investigator |
YABUSHITA Shiro Waseda University, School of Politica Science and Economics, Professor, 政治経済学部, 教授 (30083330)
|
|---|
| Project Period (FY) |
1993 – 1994
|
| Keywords | Financial System / Banking System / Imperfect Information / Business Cycle Theory / Bank run |
|---|
| Research Abstract |
Japanese economy had been in severe depression since 1991. This depression is characterized by sharp and large declines in asset prices such as land and stocks, and also by financial distress several institutions experienced. This unstable financial system depressed the economy further. The failures in bank management and the instability of financial system had occurred many times in the United States and other foreign countries as well as Japan in the past. In Japan we have experienced bank failures and runs several times in the establishment of the banking system since Meiji Restoration and the worst banking panic occurred in 1927.
This research project is to analyze theoretically and empirically the stability of financial and banking systems and to examine their effects on the allocation of resources and macroeconomic movements. I derived several interesting results from my research, some of which are as follows :
1.I concluded from my empirical analysis of bank closing in 1927 in Japan that the main cause was not the general loss of confidence in the banking system but their mismanagement such as failures in risk diversification.
2.It is concluded that in financial markets with imperfect information, there are multiple market equilibria and some of them are not efficient.
3.We showed that the bank response to deflation plays an important factor in business cycles.
|
