IDEAS home Printed from
   My bibliography  Save this article

Effectiveness of the Zero Interest Rate Policy for Financial Markets in Japan: Principal Components Analysis


  • Yutaka Kurihara


The zero interest policy was introduced by the Bank of Japan (BOJ) and kept in force from February 12, 1999 through August 11, 2000, after which the BOJ introduced the quantitative easing policy in March 19, 2001. On March 9, 2006, the BOJ exited quantitative easing amid signs that deflation was ending and the recession had disappeared. After that, the zero interest rate policy again was introduced. Quantitative easing policies has been examined a lot in the literature; however, the BOJ introduced Abenomics, an unprecedented, aggressive monetary policy, on April 4, 2013. The effectiveness of the monetary policy during the zero interest rate policy era has not been adequately discussed. This article focuses on daily Japanese stock prices during the zero interest rate era; employs a principal components analysis to determine the effectiveness of the policy; and shows domestic interest rates, US interest rates, US and China stock prices, and the exchange rate of yen/US dollar influence Japanese stock prices but that the yen/Euro exchange rate does not.

Suggested Citation

  • Yutaka Kurihara, 2016. "Effectiveness of the Zero Interest Rate Policy for Financial Markets in Japan: Principal Components Analysis," Applied Economics and Finance, Redfame publishing, vol. 3(3), pages 103-111, August.
  • Handle: RePEc:rfa:aefjnl:v:3:y:2016:i:3:p:103-111

    Download full text from publisher

    File URL:
    Download Restriction: no

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. repec:rfa:afajnl:v:3:y:2017:i:2:p:42-48 is not listed on IDEAS

    More about this item


    central bank; monetary policy; stock price; zero interest rate policy;

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rfa:aefjnl:v:3:y:2016:i:3:p:103-111. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Redfame publishing). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.