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Banking in Japan: Will "Too Big To Fail" Prevail?

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Author Info
Rixtel, Adrian van
Wiwattanakantang, Yupana
Souma, Toshiyuki
Suzuki, Kazunori

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Abstract

This paper reviews the evolution of the Japanese banking sector and the development of the banking crisis in Japan in the context of "too big to fail." It describes the deterioration of the Japanese financial sector caused by the bad loan problems and the failure of policymakers to get a grip on the underlying problems. Even at the start of the new century, Japanese policymakers still continue to struggle to find the right policy response to tackle the banking problems and how to avoid moral hazard behavior intertwined with "too big to fail" concerns. The increasing concentration in the Japanese banking industry, which is now dominated by five huge financial conglomerates, should make it more difficult to definitely end "too big to fail" in Japanese prudential policy. In this respect, we believe that the "too big to fail" policy in Japan will prevail.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/13912/1/wp2002-16a.pdf
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Publisher Info
Paper provided by Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University in its series CEI Working Paper Series with number 2002-16.

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Length: 53 p.
Date of creation: Dec 2002
Date of revision:
Handle: RePEc:hit:hitcei:2002-16

Note: This paper is forthcoming in Too-Big-Too-Fail: Policies and Practices in Government Bailouts, edited by Benton Gup and to be published by Quorum Books in 2003.
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Related research
Keywords: Too big to fail; Banking crisis; Japan;

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Find related papers by JEL classification:
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Saito, Makoto & Shiratsuka, Shigenori, 2001. "Financial Crises As the Failure of Arbitrage: Implications for Monetary Policy," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 19(S1), pages 239-70, February. [Downloadable!]
  2. Mark M. Spiegel & Nobuyoshi Yamori, 2000. "The evolution of "too-big-to-fail" policy in Japan: evidence from market equity values," Pacific Basin Working Paper Series 00-01, Federal Reserve Bank of San Francisco. [Downloadable!]
  3. Joe Peek & Eric S. Rosengren, 1998. "Determinants of the Japan premium: actions speak louder than words," Working Papers 98-9, Federal Reserve Bank of Boston. [Downloadable!]
    Other versions:
  4. Mark M. Spiegel, 1999. "Moral hazard under the Japanese "convoy" banking system," Economic Review, Federal Reserve Bank of San Francisco, pages 3-13. [Downloadable!]
  5. repec:fip:fedreq:y:1991:i:nov:p:3-15:n:v.77no.6 is not listed on IDEAS
  6. Okina, Kunio & Shirakawa, Masaaki & Shiratsuka, Shigenori, 2001. "The Asset Price Bubble and Monetary Policy: Japan's Experience in the Late 1980s and the Lessons: Background Paper," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 19(S1), pages 395-450, February. [Downloadable!]
  7. Yamori, Nobuyoshi & Murakami, Akinobu, 1999. "Does bank relationship have an economic value?: The effect of main bank failure on client firms," Economics Letters, Elsevier, vol. 65(1), pages 115-120, October. [Downloadable!] (restricted)
  8. Takeo Hoshi & Anil Kashyap, 1999. "The Japanese Banking Crisis: Where Did It Come From and How Will It End?," NBER Working Papers 7250, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. Mark Spiegel, 2001. "The return of the "Japan Premium" - trouble ahead for Japanese banks?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue Mar. 9. [Downloadable!]
  10. Eijffinger, Sylvester & van Rixtel, Adrian, 1992. "The Japanese financial system and monetary policy: a descriptive review," Japan and the World Economy, Elsevier, vol. 4(4), pages 291-309, December. [Downloadable!] (restricted)
    Other versions:
  11. Alan Ahearne & Joseph Gagnon & Jane Haltmaier & Steve Kamin ... [et al.]., 2002. "Preventing deflation: lessons from Japan's experience in the 1990s," International Finance Discussion Papers 729, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  12. Fukao, Mitsuhiro, 2001. "Financial Deregulations, Weakness of Market Discipline, and Market Development: Japan's Experience and Lessons for Developing Countries," CEI Working Paper Series 2001-17, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  13. D. Woo, 2000. "Two Approaches to Resolving Nonperforming Assets During Financial Crises," IMF Working Papers 00/33, International Monetary Fund.
  14. Oscar Cerda & Elijah Brewer, III & Douglas D. Evanoff, 2001. "The financial safety net: costs, benefits, and implications," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Nov. [Downloadable!]
  15. Hanazaki, Masaharu & Horiuchi, Akiyoshi, 2002. "A Review of Japan's Bank Crisis from the Governance Perspective," CEI Working Paper Series 2002-3, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  16. George G. Kaufman & Steven A. Seelig, 2000. "Post-resolution treatment of depositors at failed banks: implications for the severity of banking crises, systemic risk, and too-big-to-fail," Working Paper Series WP-00-16, Federal Reserve Bank of Chicago. [Downloadable!]
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hanazaki, Masaharu & Horiuchi, Akiyoshi, 2003. "Have Banks Contributed to Efficient Management in Japan's Manufacturing?," CEI Working Paper Series 2003-22, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  2. Dallago, Bruno, 2003. "Comparative Economic Systems and the New Comparative Economics: Foes, Competitors, or Complementary?," CEI Working Paper Series 2003-24, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  3. Michiel van Leuvensteijn & Jacob A. Bikker & Adrian van Rixtel & Christoffer Kok-Sørensen, 2007. "A new approach to measuring competition in the loan markets of the euro area," Banco de España Working Papers 0736, Banco de España. [Downloadable!]
    Other versions:
  4. Ahn, Sanghoon, 2003. "Technology Upgrading with Learning Cost," CEI Working Paper Series 2003-21, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  5. Yener Altunbaş & Alper Kara & Adrian van Rixtel, 2007. "Corporate governance and corporate ownership: The investment behaviour of Japanese institutional investors," Banco de España Occasional Papers 0703, Banco de España. [Downloadable!]
  6. Gennaioli, Nicola & Rossi, Stefano, 2008. "Judicial Discretion in Corporate Bankruptcy," CEI Working Paper Series 2008-5, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  7. Hanazaki, Masaharu & Souma, Toshiyuki & Wiwattanakantang, Yupana, 2004. "Silent Large Shareholders and Entrenched Bank Management: Evidence from the Banking Crisis in Japan," CEI Working Paper Series 2004-1, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  8. Gennaioli, Nicola & Rossi, Stefano, 2008. "Optimal Resolutions of Financial Distress by Contract," CEI Working Paper Series 2008-6, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
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