IDEAS home Printed from
   My bibliography  Save this paper

Banking Regulation and Supervision in Japan


  • Maximilian J.B Hall


Despite significant changes to the governing institutional framework and to operational procedures, a number of serious doubts remain concerning the cost-effectiveness of banking regulation and supervision in Japan. This paper duly highlights these lingering doubts focussing, in particular, on failure resolution policy and the authorities\\' handling of the banks\\' bad debtproblems. One of the main conclusions of the paper is that the present government\\'s commitment to resolve the banking industry\\'s bad debt problem by end-2004 is extremely unlikely to be met without a major injection of additional public funds.

Suggested Citation

  • Maximilian J.B Hall, 2002. "Banking Regulation and Supervision in Japan," FMG Special Papers sp139, Financial Markets Group.
  • Handle: RePEc:fmg:fmgsps:sp139

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Smith, Bruce D., 1984. "Private information, deposit interest rates, and the `stability' of the banking system," Journal of Monetary Economics, Elsevier, vol. 14(3), pages 293-317, November.
    2. Koskela, Erkki & Stenbacka, Rune, 2000. "Is there a tradeoff between bank competition and financial fragility?," Journal of Banking & Finance, Elsevier, vol. 24(12), pages 1853-1873, December.
    3. Freixas, Xavier & Parigi, Bruno M & Rochet, Jean-Charles, 2000. "Systemic Risk, Interbank Relations, and Liquidity Provision by the Central Bank," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(3), pages 611-638, August.
    4. Berger, Allen N & Hannan, Timothy H, 1989. "The Price-Concentration Relationship in Banking," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 291-299, May.
    5. Franklin Allen & Douglas Gale, 2000. "Financial Contagion," Journal of Political Economy, University of Chicago Press, vol. 108(1), pages 1-33, February.
    6. Michael D. Bordo & Hugh Rockoff & Angela Redish, 1993. "A Comparison of the United States and Canadian Banking Systems in the Twentieth Century: Stability vs. Efficiency?," NBER Working Papers 4546, National Bureau of Economic Research, Inc.
    7. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 14-23.
    8. Jacklin, Charles J & Bhattacharya, Sudipto, 1988. "Distinguishing Panics and Information-Based Bank Runs: Welfare and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 568-592, June.
    9. Xavier Vives, 2001. "Restructuring Financial Regulation in the European Monetary Union," Journal of Financial Services Research, Springer;Western Finance Association, vol. 19(1), pages 57-82, February.
    10. Douglas W. Diamond & Raghuram G. Rajan, 2001. "Liquidity Risk, Liquidity Creation, and Financial Fragility: A Theory of Banking," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 287-327, April.
    11. Perotti, Enrico C. & Suarez, Javier, 2002. "Last bank standing: What do I gain if you fail?," European Economic Review, Elsevier, vol. 46(9), pages 1599-1622, October.
    12. Marcel Canoy & Machiel van Dijk & Jan Lemmen & Ruud de Mooij & Jürgen Weigand, 2001. "Competition and stability in banking," CPB Document 15, CPB Netherlands Bureau for Economic Policy Analysis.
    13. Cordella, Tito & Yeyati, Eduardo Levy, 2002. "Financial opening, deposit insurance, and risk in a model of banking competition," European Economic Review, Elsevier, vol. 46(3), pages 471-485, March.
    14. Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 393-414.
    15. Ben Craig & João Cabral dos Santos, 1997. "The risk effects of bank acquisitions," Economic Review, Federal Reserve Bank of Cleveland, issue Q II, pages 25-35.
    16. Matutes, Carmen & Vives, Xavier, 2000. "Imperfect competition, risk taking, and regulation in banking," European Economic Review, Elsevier, vol. 44(1), pages 1-34, January.
    17. Elena Carletti, 1999. "Bank Moral Hazard and Market Discipline," FMG Discussion Papers dp326, Financial Markets Group.
    18. Yehning Chen, 1999. "Banking Panics: The Role of the First-Come, First-Served Rule and Information Externalities," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 946-968, October.
    19. Franklin Allen & Hans Gersbach & Jan-Pieter Krahnen & Anthony M. Santomero, 2001. "Competition Among Banks: Introduction and Conference Overview," Review of Finance, European Finance Association, vol. 5(1-2), pages 1-11.
    20. Wilko Bolt & Alexander F. Tieman, 2004. "Banking Competition, Risk and Regulation," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(4), pages 783-804, December.
    21. Keeley, Michael C, 1990. "Deposit Insurance, Risk, and Market Power in Banking," American Economic Review, American Economic Association, vol. 80(5), pages 1183-1200, December.
    22. Nagarajan, S. & Sealey, C. W., 1995. "Forbearance, deposit insurance pricing, and incentive compatible bank regulation," Journal of Banking & Finance, Elsevier, vol. 19(6), pages 1109-1130, September.
    23. Benston, George J & Hunter, William C & Wall, Larry D, 1995. "Motivations for Bank Mergers and Acquisitions: Enhancing the Deposit Insurance Put Option versus Earnings Diversification," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(3), pages 777-788, August.
    24. Chari, V V & Jagannathan, Ravi, 1988. " Banking Panics, Information, and Rational Expectations Equilibrium," Journal of Finance, American Finance Association, vol. 43(3), pages 749-761, July.
    25. Tommaso Padoa-Schioppa, 2001. "Bank Competition: A Changing Paradigm," Review of Finance, European Finance Association, vol. 5(1-2), pages 13-20.
    26. Calomiris, Charles W & Kahn, Charles M, 1991. "The Role of Demandable Debt in Structuring Optimal Banking Arrangements," American Economic Review, American Economic Association, vol. 81(3), pages 497-513, June.
    27. Matutes, Carmen & Vives, Xavier, 1996. "Competition for Deposits, Fragility, and Insurance," Journal of Financial Intermediation, Elsevier, vol. 5(2), pages 184-216, April.
    28. Cara S. Lown & Carol L. Osler & Philip E. Strahan & Amir Sufi, 2000. "The changing landscape of the financial services industry: what lies ahead?," Economic Policy Review, Federal Reserve Bank of New York, issue Oct, pages 39-54.
    29. Kevin C. Murdock & Thomas F. Hellmann & Joseph E. Stiglitz, 2000. "Liberalization, Moral Hazard in Banking, and Prudential Regulation: Are Capital Requirements Enough?," American Economic Review, American Economic Association, vol. 90(1), pages 147-165, March.
    Full references (including those not matched with items on IDEAS)


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

    Cited by:

    1. Maximilian J.B. Hall, 2004. "Basel II: panacea or a missed opportunity?," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 57(230), pages 215-264.
    2. Saadaoui, Zied, 2008. "Capital standards and banking stability in emerging countries: an empirical approach," MPRA Paper 25464, University Library of Munich, Germany.
    3. Shaw, Ming-fu & Chang, Juin-jen & Chen, Hung-Ju, 2013. "Capital adequacy and the bank lending channel: Macroeconomic implications," Journal of Macroeconomics, Elsevier, vol. 36(C), pages 121-137.
    4. Philip Arestis & Panicos Demetriades & Bassam Fattouh, 2003. "Financial Policies and the Aggregate Productivity of the Capital Stock: Evidence from Developed and Developing Economies," Eastern Economic Journal, Eastern Economic Association, vol. 29(2), pages 217-242, Spring.
    5. Drake, Leigh & Hall, Maximilian J.B. & Simper, Richard, 2009. "Bank modelling methodologies: A comparative non-parametric analysis of efficiency in the Japanese banking sector," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 19(1), pages 1-15, February.
    6. Maximilian Hall, 1999. "Deposit Insurance Reform in Japan: Better Late Than Never?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 15(3), pages 211-242, May.
    7. Reszat, Beate, 2003. "Japan?s Financial Markets: The Lost Decade," HWWA Discussion Papers 231, Hamburg Institute of International Economics (HWWA).
    8. Lütz, Susanne, 2003. "Convergence within National Diversity: A Comparative Perspective on the Regulatory State in Finance," MPIfG Discussion Paper 03/7, Max Planck Institute for the Study of Societies.
    9. Vitols, Sigurt, 1995. "Inflation versus central bank independence? Banking regulation and financial stability in the US and Germany," Discussion Papers, Research Unit: Economic Change and Employment FS I 95-312, Social Science Research Center Berlin (WZB).

    More about this item


    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:fmg:fmgsps:sp139. 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: (The FMG Administration). 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.