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Sorting Out Japan's Financial Crisis

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  • Anil K. Kashyap

Abstract

This paper makes three contributions. First, I report information on the size of the Japanese financial crisis. Drawing principally on work by Fukao (2003) and Doi and Hoshi (2003) I estimate that the current taxpayer liability for losses incurred but yet to be recognized is likely to be at least 24% of GDP. Second, I explain why it has been so difficult to end the crisis. Third, I sketch the likely ingredients of what will be required to successfully resolve the crisis. The overarching principle is that Japan's banks, insurance companies, and government financial agencies all suffer different problems and require different solutions. But all three sectors are connected, and a failure to tackle concurrently the problems of all three promises to doom any reform plan.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9384.

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Date of creation: Dec 2002
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Publication status: published as Kashyap, Anil K. "Sorting Out Japan's Financial Crisis," FRB Chicago - Economic Perspectives, 2004, v26(4,4th-Qtr), 42-55.
Handle: RePEc:nbr:nberwo:9384

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  1. Magnus Blomström & Jennifer Corbett & Fumio Hayashi & Anil Kashyap, 2003. "Structural Impediments to Growth in Japan," NBER Books, National Bureau of Economic Research, Inc, number blom03-1, October.
  2. Mitsuhiro Fukao, 2002. "Financial Sector Profitability and Double-Gearing," NBER Working Papers 9368, National Bureau of Economic Research, Inc.
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Cited by:
  1. Auerbach, Alan J & Obstfeld, Maurice, 2004. "The Case for Open-Market Purchases in a Liquidity Trap," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4447, C.E.P.R. Discussion Papers.
  2. Hakenes, Hendrik & Schnabel, Isabel, 2004. "Banks without Parachutes - Competitive Effects of Government Bail-out Policies," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 8, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  3. Mark M. Spiegel & Nobuyoshi Yamori, 2003. "Determinants of voluntary bank disclosure: evidence from Japanese Shinkin banks," Pacific Basin Working Paper Series, Federal Reserve Bank of San Francisco 03-03, Federal Reserve Bank of San Francisco.
  4. Lars E.O. Svensson, 2003. "Escaping from a Liquidity Trap and Deflation: The Foolproof Way and Others," NBER Working Papers 10195, National Bureau of Economic Research, Inc.
  5. Shimizu, Katsutoshi, 2006. "How can we effectively resolve the financial crisis: Empirical evidence on the bank rehabilitation plan of the Japanese government," Pacific-Basin Finance Journal, Elsevier, Elsevier, vol. 14(2), pages 119-134, April.
  6. Marianne Rubinstein, 2009. "Quels enseignements tirer de la crise financière japonaise pour la crise actuelle ?," Revue d'Économie Financière, Programme National Persée, Programme National Persée, vol. 94(1), pages 251-271.
  7. Edgardo Barandiarán, 2003. "El Prestamista de Última Instancia en la Nueva Industria Bancaria," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 40(120), pages 337-358.
  8. Elías Albagli, 2003. "El Embriague Financiero: Una Visión Alternativa de Amplificación Bancaria," Working Papers Central Bank of Chile, Central Bank of Chile 207, Central Bank of Chile.
  9. Elijah Brewer, III & Hesna Genay & George G. Kaufman, 2003. "Banking relationships during financial distress: the evidence from Japan," Economic Perspectives, Federal Reserve Bank of Chicago, Federal Reserve Bank of Chicago, issue Q III, pages 2-18.
  10. Se-Jik Kim, 2003. "Macro Effects of Corporate Restructuring in Japan," IMF Working Papers 03/203, International Monetary Fund.
  11. Takeo Hoshi & Anil K. Kashyap, 2004. "Japan's Financial Crisis and Economic Stagnation," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 18(1), pages 3-26, Winter.

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