2000 Fiscal Year Final Research Report Summary
Accounting Research about Bad Loan in Japanese Bank
| Project/Area Number |
11630146
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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 |
Accounting
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| Research Institution | Shinshu University |
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Principal Investigator |
HOSHINO Ichiro Faculty of Economics, Shinshu University, Professor, 経済学部, 教授 (10202300)
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| Project Period (FY) |
1999 – 2000
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| Keywords | Mark-to-Market / Financial Institution / Bad Loan / Capital Gain / Main Bank System / Deregulation / Real Estate for Sale / Interlocking Shareholding |
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| Research Abstract |
This research focused on disposal of problem loans, based on Financial Revitalization Law, that Japanese main banks have and then analyzed Japanese main bank system and an interlocking shareholding among banks and companies. Specific research results are as follows. First, an extraordinary loss that problem loans have can be theoretically justified to write down under generally accepted accounting principles in Japan. Second, implications of the main bank system were examined. When the system was regarded as the monitoring and governance system to discipline Japanese companies, to value stocks that have contributions to maintaining the main bank system among the companies challenges researchers and analysts. Third, the effects of the problem loans based on Financial Revitalization Law on a way to estimate allowances in the pursuit of improvement of asset quality that the banks have were analyzed as current accounting case studies. Forth, a relation ship between the deregulation to the
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banks and accounting system in Japan was examined. Focusing on evaluation issues of marketable stocks, I concluded that the more efficient Japanese capital market was, the more important adequate accounting disclosure. This improvement of accounting disclosure rules will further contribute to keep the efficient capital market in Japan. Fifth, economic consequences about mandated writing-off of real estate for sale were examined. This accounting procedure has not been effective yet, but a lot of companies adapted voluntarily the procedure as one of popular business practices. Finally, dysfunction of interlocking shareholding in terms of accounting evaluation issues was indicated. This unique system, i.e. interlocking shareholding among banks and companies, is valuing their stocks unfairly. This improvement would lead to the problem that an eclipse of its business custom and the appropriate operation of the capital market will challenge Japanese unique management strategies. For these reasons, these research results will further increase the need and interest of research. Less
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