1999 Fiscal Year Final Research Report Summary
Influence of the financial Big Bang on the financial system and macro-economy in Japan
| Project/Area Number |
10630085
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
Public finance/Monetary economics
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| Research Institution | The university of Tokyo |
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Principal Investigator |
HORIUCHI Akiyoshi University of Tokyo, Professor of Economics, 大学院・経済学研究科, 教授 (00018029)
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| Project Period (FY) |
1998 – 1999
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| Keywords | financial system / financial inter-mediation / corporate governance / non-performing loans / amakudarui / the financial Big Bang |
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| Research Abstract |
This research project investigates the specific process of Japan's bank crisis since the early 1990s and its influences on the Japanese economy. The first paper compiled in the submitted report overviews the historical background of the bank-centered financial system that has dominated the Japanese economy since the end of World War II. In the overview, two concepts are utilized to explain why the Japanese financial system showed inflexible nature since the 1980s: i.e., 'path dependence' and 'adaptive efficiency.' Both the second paper "Financial fragility and recent developments in the Japanese safety net" and the third one "Japan's bank crisis: An overview from governance perspective" Investigate an origin of the bank crisis and fragility of the banking system that Japan has faced since the early 1990s based on the corporate governance theory. The malfunction of incentive system surrounding bank management is stressed to explain the crisis. The fourth paper "The Big Bang: Idea and reality" discusses why the Japanese government was forced to announce the full-scale reform plan to liberalize the Japanese financial system and remaining issued to be addressed before the ideas of the reform is achieved. The fifth paper "Did amakudari undermine the effectiveness of regulatory monitoring in Japan?" examines the difficulty of agent-principal problem associated with the financial regulatory process. Specifically, the paper investigate the so-called amakudari practice prevailing in the Japan's banking sector. It concludes that amakudari from regulatory authorities undermined effectiveness of supervision of the authorities and thereby making the banking sector more fragile.
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