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Japan's cross-shareholding legacy: the financial impact on banks

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  • R. Ashle Baxter

Abstract

Japanese banks' financial results for the Fiscal Year Ending (FYE) March 2009 marked their worst performance in recent years. Although soaring loan loss charges contributed to the banks' weak performances, losses on equity securities were also a key driver. These losses have drawn renewed attention to the practice of Japanese banks owning stock in the companies to which they lend through so-called cross-shareholdings, and the market risk resulting from these holdings. This Asia Focus provides a brief background on the development of cross-shareholding. The report also examines some of the problems associated with shareholdings and considers measures that banks and the government have taken to unwind these shareholdings.

Suggested Citation

  • R. Ashle Baxter, 2009. "Japan's cross-shareholding legacy: the financial impact on banks," Asia Focus, Federal Reserve Bank of San Francisco, issue Aug.
    • Handle: RePEc:fip:fedfaf:y:2009:i:aug
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    File URL: https://www.frbsf.org/banking/wp-content/uploads/sites/5/August-2009-Japans-Cross-Shareholding-Legacy-the-Financial-Impact-on-Banks-august-09-FINAL.pdf
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    Keywords

    Banks and banking - Japan; Stockholders;

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