The evolution of "too-big-to-fail" policy in Japan: evidence from market equity values
This paper examines the evidence in bank equity markets concerning bank regulatory policies in Japan over the turbulent 1995-1998 period. We find that investors grouped banks according to regulatory status in assessing whether a bank was currently treated as "too-big-to-fail." when a failure of a bank of certain regulatory status was announced, excess returns on other banks of that regulatory status and below displayed heightened sensitivity to adverse news. This suggests that investors updated their beliefs about which classes of banks were protected by too-big-to-fail policies over the course of the sample. The pattern that emerges suggests that government officials pursued a policy of "regulatory triage," where initially Credit Cooperatives, then Second Regional banks, then First Regional banks, and finally City banks were allowed to fail.
|Date of creation:||2000|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (415) 974-3184
Fax: (415) 974-2168
Web page: http://www.frbsf.org/economics/pbc/
More information through EDIRC
|Order Information:|| Email: |
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.:
- Peek, Joe & Rosengren, Eric S., 2001.
"Determinants of the Japan premium: actions speak louder than words,"
Journal of International Economics,
Elsevier, vol. 53(2), pages 283-305, April.
- Joe Peek & Eric S. Rosengren, 1999. "Determinants of the Japan Premium: Actions Speak Louder Than Words," NBER Working Papers 7251, National Bureau of Economic Research, Inc.
- Joe Peek & Eric S. Rosengren, 1998. "Determinants of the Japan premium: actions speak louder than words," Working Papers 98-9, Federal Reserve Bank of Boston.
- Hesna Genay, 1999. "Japanese banks and market discipline," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Aug.
- Nobuyoshi Yamori, 1999. "Stock Market Reaction to the Bank Liquidation in Japan: A Case for the Informational Effect Hypothesis," Journal of Financial Services Research, Springer, vol. 15(1), pages 57-68, February.
- Aharony, Joseph & Swary, Itzhak, 1996. "Additional evidence on the information-based contagion effects of bank failures," Journal of Banking & Finance, Elsevier, vol. 20(1), pages 57-69, January.
- Yamori, Nobuyoshi & Murakami, Akinobu, 1999. "Does bank relationship have an economic value?: The effect of main bank failure on client firms," Economics Letters, Elsevier, vol. 65(1), pages 115-120, October.
- Larry D. Wall, 1993.
"Too-big-to-fail after FDICIA,"
Federal Reserve Bank of Atlanta, issue Jan, pages 1-14.
- Nobuyoshi Yamori, 1999. "Contagion effects of bank liquidation in Japan," Applied Economics Letters, Taylor & Francis Journals, vol. 6(11), pages 703-705.
- Robert L. Hetzel, 1991. "Too big to fail : origins, consequences, and outlook," Economic Review, Federal Reserve Bank of Richmond, issue Nov, pages 3-15.
- Mark M. Spiegel, 1999.
"Bank charter value and the viability of the Japanese convoy system,"
Pacific Basin Working Paper Series
99-06, Federal Reserve Bank of San Francisco.
- Spiegel, Mark M., 2000. "Bank Charter Value and the Viability of the Japanese Convoy System," Journal of the Japanese and International Economies, Elsevier, vol. 14(3), pages 149-168, September.
- Spiegel, M.M., 1999. "Bank Chapter Value and the Viability of the Japanese Convoy System," Papers pb99-06, Economisch Institut voor het Midden en Kleinbedrijf-.
- Elijah Brewer, III & Hesna Genay & William C. Hunter & George G. Kaufman, 1999. "Does the Japanese stock market price bank risk? evidence from bank failures," Proceedings 638, Federal Reserve Bank of Chicago.
- Mark M. Spiegel, 1999. "Moral hazard under the Japanese "convoy" banking system," Economic Review, Federal Reserve Bank of San Francisco, pages 3-13.
- Harold A. Black & M. Cary Collins & Breck L. Robinson & Robert L. Schweitzer, 1997. "Changes In Market Perception Of Riskiness: The Case Of Too-Big-To-Fail," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 20(3), pages 389-406, 09.
When requesting a correction, please mention this item's handle: RePEc:fip:fedfpb:00-01. 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: (Diane Rosenberger)
If references are entirely missing, you can add them using this form.