Foreign bank lending and bond underwriting in Japan during the lost decade
We examine foreign intermediation activity in Japan during the so-called "lost decade" of the 1990s, contrasting the behavior of lending by foreign commercial banks and underwriting activity by foreign investment banks over that period. Foreign bank lending is shown to be sensitive to domestic Japanese conditions, particularly Japanese interest rates, more so than their domestic Japanese bank counterparts. During the 1990s, foreign bank lending in Japan fell, both in overall numbers and as a share of total lending. However, there was marked growth in foreign underwriting activity in the international yen-denominated bond sector. A key factor in the disparity between these activities is their different clienteles: While foreign banks in Japan lent primarily to domestic borrowers, international yen-denominated bond issuers were primarily foreign entities with yen funding needs or opportunities for profitable swaps. Indeed, low interest rates that discouraged lending activity in Japan by foreign banks directly encouraged foreign underwriting activity tied to the so-called "carry trades." Regulatory reforms, particularly the "Big Bang" reforms of the 1990s, also play a large role in the growth of foreign underwriting activity over our sample period.
|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (415) 974-2000
Fax: (415) 974-3333
Web page: http://www.frbsf.org/
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.:
- Linda S. Goldberg, 2002.
"When Is U.S. Bank Lending to Emerging Markets Volatile?,"
in: Preventing Currency Crises in Emerging Markets, pages 171-196
National Bureau of Economic Research, Inc.
- Linda S. Goldberg, 2001. "When Is U.S. Bank Lending to Emerging Markets Volatile?," NBER Working Papers 8209, National Bureau of Economic Research, Inc.
- Linda S. Goldberg, 2001. "When is U.S. bank lending to emerging markets volatile?," Staff Reports 119, Federal Reserve Bank of New York.
- Joe Peek & Eric S. Rosengren, 1996.
"The International Transmission of Financial Shocks: The Case of Japan,"
Boston College Working Papers in Economics
357, Boston College Department of Economics.
- Peek, Joe & Rosengren, Eric S, 1997. "The International Transmission of Financial Shocks: The Case of Japan," American Economic Review, American Economic Association, vol. 87(4), pages 495-505, September.
- Joe Peek & Eric S. Rosengren, 1996. "The international transmission of financial shocks: the case of Japan," Working Papers 96-1, Federal Reserve Bank of Boston.
- Kollo, Michael G., 2005. "Underwriter competition and gross spreads in the eurobond market," Working Paper Series 0550, European Central Bank.
- Marco Arena & Carmen Reinhart & Francisco Vázquez, 2006.
"The Lending Channel in Emerging Economics: Are Foreign Banks Different?,"
NBER Working Papers
12340, National Bureau of Economic Research, Inc.
- Francisco F. VÃ¡zquez & Carmen Reinhart & Marco Arena, 2007. "The Lending Channel in Emerging Economies; Are Foreign Banks Different?," IMF Working Papers 07/48, International Monetary Fund.
- Arturo Galindo & Alejandro Micco & Andrew Powell, 2005.
"Loyal Lenders or Fickle Financiers: Foreign Banks in Latin America,"
IDB Publications (Working Papers)
6832, Inter-American Development Bank.
- Arturo Galindo & Alejandro Micco & Andrew Powell, 2004. "Loyal Lenders or Fickle Financiers: Foreign Banks in Latin America," Business School Working Papers banksla, Universidad Torcuato Di Tella.
- Arturo Galindo & Alejandro Micco & Andrew Powell, 2005. "Loyal Lenders or Fickle Financiers: Foreign Banks in Latin America," Research Department Publications 4403, Inter-American Development Bank, Research Department.
- Carter, Richard B & Manaster, Steven, 1990. " Initial Public Offerings and Underwriter Reputation," Journal of Finance, American Finance Association, vol. 45(4), pages 1045-67, September.
- Michael G. Kollo & Ian G. Sharpe, 2006. "Relationships And Underwriter Spreads In The Eurobond Floating Rate Note Market," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 29(2), pages 163-180.
- Gorton, Gary & Winton, Andrew, 2003.
Handbook of the Economics of Finance,
in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, edition 1, volume 1, chapter 8, pages 431-552
- Gary Gorton & Andrew Winton, 2002. "Financial Intermediation," NBER Working Papers 8928, National Bureau of Economic Research, Inc.
- Gary Gorton & Andrew Winton, 2002. "Financial Intermediation," Center for Financial Institutions Working Papers 02-28, Wharton School Center for Financial Institutions, University of Pennsylvania.
- 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.
- Takeo Hoshi & Anil Kashyap, 2000. "The Japanese Banking Crisis: Where Did It Come From and How Will It End?," NBER Chapters, in: NBER Macroeconomics Annual 1999, Volume 14, pages 129-212 National Bureau of Economic Research, Inc.
- Linda S. Goldberg, 2005. "The International Exposure of U.S. Banks," NBER Working Papers 11365, National Bureau of Economic Research, Inc.
- Robert N. McCauley & William R. White, 1997. "The Euro and European financial markets," BIS Working Papers 41, Bank for International Settlements.
- Megginson, William L & Weiss, Kathleen A, 1991. " Venture Capitalist Certification in Initial Public Offerings," Journal of Finance, American Finance Association, vol. 46(3), pages 879-903, July.
- Robert N McCauley, 1999. "The Euro and the Liquidity of European Fixed Income Markets," CGFS Papers chapters, in: Bank for International Settlements (ed.), Market Liquidity: Research Findings and Selected Policy Implications, volume 11, pages 1-26 Bank for International Settlements.
- Claessens, Stijn & Glaessner, Tom, 1998. "The internationalization of financial services in Asia," Policy Research Working Paper Series 1911, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:fip:fedfwp:2006-45. 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.