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Japanese Banking Problems: Implications for Southeast Asia

In: Banking, Financial Integration, and International Crises

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Author Info

  • Joe Peek

    (University of Kentucky)

  • Eric S. Rosengren

    (Federal Reserve Bank of Boston)

Abstract

Japanese banks are among the world’s largest global financial intermediaries, with a significant presence in many regions, particularly the United States and Southeast Asia. In addition to being among the world’s largest banks, they have some of the world’s largest problems. Recent studies have found that Japanese banks have reduced lending as a consequence of these problems, that this shrinkage has been concentrated in their overseas operations, and that this shrinkage has influenced real activity in the United States. Southeast Asian economies, with both a large Japanese bank presence and capital markets less developed than those in the United States, are likely to be even more severely affected by any major retreat by Japanese banks. In addition, given recent problems in many Asian countries, the extent of any Japanese bank retreat might be magnified by host country as well as home country problems. This paper examines Japanese banking activities along three dimensions. First, it documents the expansion and the initial stage of retrenchment of lending by Japanese banks in Southeast Asia. Second, we examine the response of Japanese banks to their problems at home, as exemplified by their lending behavior in Southeast Asia. We evaluate this Japanese bank response relative to that in their home market and in the United States. Third, the Japanese bank response to the problems in Southeast Asia is then compared to that of their U.S. and European competitors.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

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This chapter was published in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.) Banking, Financial Integration, and International Crises, , chapter 10, pages 303-332, 2002.

This item is provided by Central Bank of Chile in its series Central Banking, Analysis, and Economic Policies Book Series with number v03c10pp303-332.

Handle: RePEc:chb:bcchsb:v03c10pp303-332

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References

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  1. Daniel E. Nolle & Rama Seth, 1996. "Do banks follow their customers abroad?," Research Paper, Federal Reserve Bank of New York 9620, Federal Reserve Bank of New York.
  2. Joe Peek & Eric S. Rosengren, 1996. "The International Transmission of Financial Shocks: The Case of Japan," Boston College Working Papers in Economics, Boston College Department of Economics 357, Boston College Department of Economics.
  3. Gibson, Michael S, 1995. "Can Bank Health Affect Investment? Evidence from Japan," The Journal of Business, University of Chicago Press, University of Chicago Press, vol. 68(3), pages 281-308, July.
  4. Hoshi, Takeo & Kashyap, Anil & Scharfstein, David, 1990. "The role of banks in reducing the costs of financial distress in Japan," Journal of Financial Economics, Elsevier, Elsevier, vol. 27(1), pages 67-88, September.
  5. Linda S. Goldberg & Michael W. Klein, 1997. "Foreign Direct Investment, Trade and Real Exchange Rate Linkages in Developing Countries," NBER Working Papers 6344, National Bureau of Economic Research, Inc.
  6. Robert N. McCauley & Stephen Yeaple, 1994. "How lower Japanese asset prices affect Pacific financial markets," Quarterly Review, Federal Reserve Bank of New York, Federal Reserve Bank of New York, issue Spr, pages 19-33.
  7. Akiyoshi Horiuchi, 1998. "Financial Fragility in Japan: A Governance Issue," CIRJE F-Series, CIRJE, Faculty of Economics, University of Tokyo CIRJE-F-5, CIRJE, Faculty of Economics, University of Tokyo.
  8. Allen B. Frankel & Paul B. Morgan, 1992. "Deregulation and competition in Japanese banking," Proceedings, Federal Reserve Bank of Chicago 383, Federal Reserve Bank of Chicago.
  9. Hoshi, Takeo & Kashyap, Anil & Scharfstein, David, 1991. "Corporate Structure, Liquidity, and Investment: Evidence from Japanese Industrial Groups," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 106(1), pages 33-60, February.
  10. Allen B. Frankel & Paul B. Morgan, 1992. "Deregulation and competition in Japanese banking," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), Board of Governors of the Federal Reserve System (U.S.), issue Aug, pages 579-593.
  11. Kang, Jun-Koo & Stulz, Rene M, 2000. "Do Banking Shocks Affect Borrowing Firm Performance? An Analysis of the Japanese Experience," The Journal of Business, University of Chicago Press, University of Chicago Press, vol. 73(1), pages 1-23, January.
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Cited by:
  1. Patrick Honohan & Thorsten Beck, 2007. "Making Finance Work for Africa," World Bank Publications, The World Bank, number 6626, August.
  2. Peek, Joe & Rosengren, Eric S., 2001. "Determinants of the Japan premium: actions speak louder than words," Journal of International Economics, Elsevier, Elsevier, vol. 53(2), pages 283-305, April.
  3. Concetta Chiuri, Maria & Ferri, Giovanni & Majnoni, Giovanni, 2002. "The macroeconomic impact of bank capital requirements in emerging economies: Past evidence to assess the future," Journal of Banking & Finance, Elsevier, Elsevier, vol. 26(5), pages 881-904, May.
  4. Lynn Elaine Browne, 2001. "Does Japan offer any lessons for the United States?," New England Economic Review, Federal Reserve Bank of Boston, Federal Reserve Bank of Boston, pages 3-18.
  5. Yasuo Nishiyama, 2006. "The Asian Financial Crisis and Investors’ Risk Aversion," Asia-Pacific Financial Markets, Springer, Springer, vol. 13(3), pages 181-205, September.

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