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The Financial Crisis in Japan: Causes and Policy Reactions by the Bank of Japan

Author

Listed:
  • Uwe Vollmer
  • Ralf Bebenroth

Abstract

This paper describes the transmission of the recent financial crisis to Japan and compares the monetary policy reactions by the Bank of Japan (BoJ) with those during the 1990s, and with reactions by other major central banks. The paper first reviews the recent literature on the origins and transmission mechanisms of financial crises. We then consider how the financial crisis was transmitted to Japan and describe the responses by BoJ. The paper then proceeds and analyses the lessons that have been learnt by the BoJ and other central banks from the financial crisis of the 1990s.

Suggested Citation

  • Uwe Vollmer & Ralf Bebenroth, 2012. "The Financial Crisis in Japan: Causes and Policy Reactions by the Bank of Japan," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 9(1), pages 51-77, April.
  • Handle: RePEc:liu:liucej:v:9:y:2012:i:1:p:51-77
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    File URL: http://eaces.liuc.it/18242979201201/182429792012090103.pdf
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    References listed on IDEAS

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    1. Cordella, Tito & Yeyati, Eduardo Levy, 2003. "Bank bailouts: moral hazard vs. value effect," Journal of Financial Intermediation, Elsevier, vol. 12(4), pages 300-330, October.
    2. Heider, F. & Hoerova, M. & Holthausen, C., 2009. "Liquidity Hoarding and Interbank Market Spreads : The Role of Counterparty Risk," Discussion Paper 2009-40 S, Tilburg University, Center for Economic Research.
    3. Tapking, Jens & Eisenschmidt, Jens, 2009. "Liquidity risk premia in unsecured interbank money markets," Working Paper Series 1025, European Central Bank.
    4. Osano, Hiroshi, 2002. "Managerial compensation contract and bank bailout policy," Journal of Banking & Finance, Elsevier, vol. 26(1), pages 25-49, January.
    5. Shigenori Shiratsuka, 2010. "Size and Composition of the Central Bank Balance Sheet: Revisiting Japan fs Experience of the Quantitative Easing Policy," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 28, pages 79-106, November.
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    Citations

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    Cited by:

    1. Zuzana Stuchlíková, 2013. "Japanese Economy in 2007-2010," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2013(2), pages 55-68.
    2. repec:liu:liucej:v:13:y:2016:i:2:p:135-167 is not listed on IDEAS

    More about this item

    Keywords

    Financial crisis; Constructive ambiguity; Counterparty/liquidity risk; Quantitative/qualitative easing; Japan; Zero interest rate policy;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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