This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

The Japanese Banking Crisis and Economic Growth: Theoretical and Empirical Implications of Deposit Guarantees and Weak Financial Regulation

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Robert Dekle (Department of Economics, University of Southern California)
Kenneth Kletzer (Economics Department, University of California, Santa Cruz)

Additional information is available for the following registered author(s):

Abstract

An endogenous growth model with financial intermediation is used to show how government policies towards the financial sector can lead to banking crises and persistent growth slumps. The model shows how government deposit guarantees and regulatory forbearance can lead to permanent declines in the growth rate of the economy. The effects of inadequate prudential supervision on asset price dynamics under perfect foresight are also derived in the model. The policies that are used in the analysis are based on essential features of Japanese financial regulation. The implications of the model are compared to the experience of the Japanese economy and financial system during the 1990s. We find that the dynamics predicted by our model are generally consistent with the recent behavior of economic aggregates, asset prices and the banking system for Japan. A policy implication of the model is that the impact on future economic growth depends upon the length of time the government fails to enforce loan-loss reserving by banks.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.e.u-tokyo.ac.jp/cirje/research/dp/2003/2003cf225.pdf
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-225.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 37 pages
Date of creation: May 2003
Date of revision:
Handle: RePEc:tky:fseres:2003cf225

Contact details of provider:
Web page: http://www.e.u-tokyo.ac.jp/cirje/index.htm

For technical questions regarding this item, or to correct its listing, contact: ().

Related research
Keywords:

Other versions of this item:

This paper has been announced in the following NEP Reports: 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. Robert Dekle & Kenneth Kletzer, 2002. "Financial intermediation, agency, and collateral and the dynamics of banking crises: theory and evidence for the Japanese banking crisis," Pacific Basin Working Paper Series 02-10, Federal Reserve Bank of San Francisco. [Downloadable!]
    Other versions:
  2. Robert Townsend, 1979. "Optimal contracts and competitive markets with costly state verification," Staff Report 45, Federal Reserve Bank of Minneapolis. [Downloadable!]
    Other versions:
  3. Kwon, Eunkyung, 1998. "Monetary Policy, Land Prices, and Collateral Effects on Economic Fluctuations: Evidence from Japan," Journal of the Japanese and International Economies, Elsevier, vol. 12(3), pages 175-203, September. [Downloadable!] (restricted)
  4. 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:
  5. Robert Dekle & Kenneth Kletzer, . "Domestic Bank Regulation and Financial Crises: Theory and Empirical Evidence from East Asia," IMF Working Papers 01/63, International Monetary Fund. [Downloadable!]
    Other versions:
  6. Diamond, Douglas W, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Blackwell Publishing, vol. 51(3), pages 393-414, July. [Downloadable!] (restricted)
  7. Menzie D. Chinn & Kenneth M. Kletzer, 2000. "International Capital Inflows, Domestic Financial Intermediation and Financial Crises under Imperfect Information," NBER Working Papers 7902, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  8. Diamond, Douglas W & Dybvig, Philip H, 1983. "Bank Runs, Deposit Insurance, and Liquidity," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 401-19, June. [Downloadable!] (restricted)
    Other versions:
  9. Ogawa, K. & Kitasaka, S.-I., 2000. "Bank Lending in Japan: its Determinants and Macroeconomic Implications," Papers 505, Osaka - Institute of Social and Economic Research.
  10. Bayoumi, Tamim, 2000. "The Morning After: Explaining The Slowdown In Japanese Growth In The 1990s," CEPR Discussion Papers 2436, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  11. Fumio Hayashi & Edward C. Prescott, 2002. "The 1990s in Japan: A Lost Decade," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(1), pages 206-235, January. [Downloadable!] (restricted)
    Other versions:
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. Masahiro Kawai, 2005. "Reform of the Japanese Banking System," Hi-Stat Discussion Paper Series d05-102, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
    Other versions:
  2. Robert Dekle & Kenneth Kletzer, 2005. "Deposit Insurance Regulatory Forbearance and Economic Growth: Implications for the Japanese Banking Crisis," IMF Working Papers 05/169, International Monetary Fund. [Downloadable!]
    Other versions:
  3. Chakraborty, Suparna, 2006. "Amplifying Business Cycles through Credit Constraints," MPRA Paper 1808, University Library of Munich, Germany. [Downloadable!]
  4. Chakraborty, Suparna & Allen, Linda, 2007. "Revisiting the Level Playing Field: International Lending Responses to Divergences in Japanese Bank Capital Regulations from the Basel Accord," MPRA Paper 1805, University Library of Munich, Germany. [Downloadable!]
  5. Masami Imai & Seitaro Takarabe, 2009. "Transmission of Liquidity Shock to Bank Credit: Evidence from the Deposit Insurance Reform in Japan," Wesleyan Economics Working Papers 2009-001, Wesleyan University, Department of Economics. [Downloadable!]
  6. Keiichiro Kobayashi, 2003. "Deflation Caused by Bank Insolvency," Discussion papers 03022, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
  7. Keiichiro Kobayashi, 2003. "A Theory of Banking Crises (Part 1)," Discussion papers 03016, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
  8. Narayana R Kocherlakota & Ilhyock Shim, 2005. "Forbearance and Prompt Corrective Action," Levine's Bibliography 784828000000000512, UCLA Department of Economics. [Downloadable!]
    Other versions:
  9. Kenneth Kletzer, 2004. "Liberalizing Capital Flows in India: Financial Repression, Macroeconomic Policy and Gradual Reforms," Santa Cruz Department of Economics, Working Paper Series 1006, Department of Economics, UC Santa Cruz. [Downloadable!]
    Other versions:
  10. HOSONO Kaoru, 2009. "Financial Crisis, Firm Dynamics and Aggregate Productivity in Japan," Discussion papers 09012, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
  11. Suparna Chakraborty, 2005. "Real Estate Prices, Borrowing Constraints and Business Cycles -A Study of the Japanese Economy," Macroeconomics 0504012, EconWPA. [Downloadable!]
Statistics
Access and download statistics

Did you know? You can include your works in the database easily by uploading them on the Munich Personal RePEc Archive (MPRA) if you do not have access to an institutional RePEc archive.

This page was last updated on 2009-11-26.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.