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Wealth effects of financial internationalization: a case of the Yen-Dollar Agreement between the United States and Japan

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  • Nobuyoshi Yamori
  • Taiji Baba

Abstract

The Yen-Dollar Agreement between the United States and Japan in 1984 was an epoch-making event in Japanese financial history. In spite of the importance of the Yen-Dollar Agreement for Japanese financial liberalization, there are few empirical studies about its effects. In this paper, we investigate the wealth effects of the Agreement on bank stockholders. Although we expect the negative impact of the intense competition on stockholders' wealth, our empirical results show that the Agreement produced positive wealth effects on bank stockholders. Our results suggest that the benefits of financial liberalization triggered by the Agreement were expected to outweigh the negative effect of the intense competition. This is one of the reasons why the liberalization and internationalization of Japanese financial markets and institutions have been going more smoothly than expected.

Suggested Citation

  • Nobuyoshi Yamori & Taiji Baba, 2000. "Wealth effects of financial internationalization: a case of the Yen-Dollar Agreement between the United States and Japan," Applied Financial Economics, Taylor & Francis Journals, vol. 10(2), pages 193-198.
  • Handle: RePEc:taf:apfiec:v:10:y:2000:i:2:p:193-198
    DOI: 10.1080/096031000331833
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    References listed on IDEAS

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    1. Aharony, Joseph & Saunders, Anthony & Swary, Itzhak, 1985. "The Effects of the International Banking Act on Domestic Bank Profitability and Risk," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 17(4), pages 493-506, November.
    2. Hultman, Charles W. & Randolph McGee, L., 1989. "Factors affecting the foreign banking presence in the U.S," Journal of Banking & Finance, Elsevier, vol. 13(3), pages 383-396, July.
    3. Goldberg, Lawrence G & Saunders, Anthony, 1981. "The Growth of Organizational Forms of Foreign Banks in the U.S.: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 13(3), pages 365-374, August.
    4. Mahajan, Arvind & Dubofsky, David A & Fraser, Donald, 1991. "Valuation Effects of the International Banking Act on Foreign Banks Operating in the United States," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(1), pages 110-119, February.
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    Cited by:

    1. Nobuyoshi Yamori & Kozo Harimaya & Kazumine Kondo, 2003. "Are Banks Affiliated with Bank Holding Companies More Efficient Than Independent Banks? The Recent Experience Regarding Japanese Regional BHCs," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 10(4), pages 359-376, December.

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