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Japanese Banking Problems: Implications For Southeast Asia

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  • Joe Peek Eric
  • S. Rosengren

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.

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Bibliographic Info

Paper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 121.

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Date of creation: Nov 2001
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Handle: RePEc:chb:bcchwp:121

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  1. 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, vol. 73(1), pages 1-23, January.
  2. Linda S. Goldberg & Michael Klein, 1996. "Foreign direct investment, trade, and real exchange rate linkages in developing countries," Proceedings, Federal Reserve Bank of San Francisco, pages 73-100.
  3. 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.), issue Aug, pages 579-593.
  4. Gibson, Michael S, 1995. "Can Bank Health Affect Investment? Evidence from Japan," The Journal of Business, University of Chicago Press, vol. 68(3), pages 281-308, July.
  5. Allen B. Frankel & Paul B. Morgan, 1992. "Deregulation and competition in Japanese banking," Proceedings 383, Federal Reserve Bank of Chicago.
  6. Daniel E. Nolle & Rama Seth, 1996. "Do banks follow their customers abroad?," Research Paper 9620, Federal Reserve Bank of New York.
  7. Peek, Joe & Rosengren, Eric S, 1997. "The International Transmission of Financial Shocks: The Case of Japan," American Economic Review, American Economic Association, vol. 87(4), pages 495-505, September.
  8. Takeo Hoshi & Anil Kashyap & David Scharfstein, 1990. "The Role of Banks in Reducing the Costs of Financial Distress in Japan," NBER Working Papers 3435, National Bureau of Economic Research, Inc.
  9. Robert N. McCauley & Stephen Yeaple, 1994. "How lower Japanese asset prices affect Pacific financial markets," Quarterly Review, Federal Reserve Bank of New York, issue Spr, pages 19-33.
  10. Akiyoshi Horiuchi, 1998. "Financial Fragility in Japan: A Governance Issue," CIRJE F-Series CIRJE-F-5, CIRJE, Faculty of Economics, University of Tokyo.
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Cited by:
  1. 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, vol. 26(5), pages 881-904, May.
  2. Joe Peek & Eric S. Rosengren, 1999. "Determinants of the Japan Premium: Actions Speak Louder Than Words," NBER Working Papers 7251, National Bureau of Economic Research, Inc.
  3. Patrick Honohan & Thorsten Beck, 2007. "Making Finance Work for Africa," World Bank Publications, The World Bank, number 6626, October.
  4. Lynn Elaine Browne, 2001. "Does Japan offer any lessons for the United States?," New England Economic Review, 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, vol. 13(3), pages 181-205, September.

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