2012 Fiscal Year Final Research Report
A study of desirable prudential policy for small countries
| Project/Area Number |
23830075
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| Research Category |
Grant-in-Aid for Research Activity Start-up
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| Allocation Type | Single-year Grants |
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| Research Field |
Public finance/Monetary economics
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| Research Institution | Tokai University |
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Principal Investigator |
FUDA Koji 東海大学, 政治経済学部, 講師 (70609370)
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| Project Period (FY) |
2011 – 2012
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| Keywords | プルーデンス政策 / 政策協調 / 小国 |
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| Research Abstract |
This study tried to present a guideline for prudential policy design for small countries. As shown in currency and financial crises amid rapid economic growth in Iceland in 2008 and Thailand in 1997, financial system in small countries are vulnerable to international financial market. Therefore I made a comparative study of prudential policy in Iceland and Thailand.The main findings of the study are as follows. Firstly, on the basis of economic and financial statistic data, official investigative reports on the crises and author’s interview, this study found that financial authorities could not enforce a rigidprudential policy as a preventive measure while they were aware of the importance of the policy. Because they feared the international capital inflows would diminish and the economic growth would decline if they enforced the rigid policy.Secondly, this study found the importance of pursuing international policy coordination on the prudential policy, i.e. deposit insurance and international lender of last resort, which mitigated the ill effect of crises.Finally, it is suggested that financial authorities in small countries should design prudential policy with neighbor countries and put priority to the policy for mitigating the ill effect of the crises.
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