IDEAS home Printed from https://ideas.repec.org/p/hit/hitcei/2001-25.html
   My bibliography  Save this paper

Reflections on New Financial System in Japan: Participation Costs, Wealth Distribution,and Security Market-Based Intermediation

Author

Listed:
  • Kitamura, Yukinobu
  • Suto, Megumi
  • Teranishi, Juro

Abstract

This paper deliberates on the re-designing of the financial system in Japan, currently ailing seriously. With four conditions in the background - enhanced capability of risk transfer through financial markets, increased participation costs in the financial markets, increases in probabilities of systemic risks, and the pattern of wealth distribution, we will argue the followings: (i) Risk management would make more use of risk elimination by institutional investors and risk transfers through the financial markets. It is urgently needed to promote efficient system of risk transfer through financial intermediaries. (ii) Financial market transaction is an area for institutional investors; not suited for individual investors. (iii) It is necessary to establish an institutional framework to promote active corporate monitoring by institutional investors, who are also principal shareholders. (iv) Banks will play an important role in financing small and medium size firms, - in particular venture firms, when probabilities of systemic risks are alleviated in the future. In this sense, banking is in a state of evolution rather than outright decline. As a policy conclusion, we will stress the importance of participation by individual investors in the mechanism of risk transfers through security market-based intermediation.

Suggested Citation

  • Kitamura, Yukinobu & Suto, Megumi & Teranishi, Juro, 2002. "Reflections on New Financial System in Japan: Participation Costs, Wealth Distribution,and Security Market-Based Intermediation," CEI Working Paper Series 2001-25, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hit:hitcei:2001-25
    Note: September 12, 2001; 6th Revision July 3, 2002, This paper was presented at the conference on Designing Financial Systems in East Asia and Japan: Toward a Twenty-First Century Paradigm. This two-day conference was co-organized by the International Monetary Fund and the CEI. It was held during September 24-25, 2001 at Hitotsubashi Memorial Hall in Tokyo, Japan. A select group of academics, researchers and policy makers from around the world gathered to examine the timely issue of how the financial systems and corporate governance in East Asia and Japan should be redesigned in order to achieve sustainable economic development. The conference included six sessions with 17 papers. All the presented papers were added to the CEI series of working papers. The series, as well as the contents of the conference, can be reached at http://cei.ier.hit-u.ac.jp.
    as

    Download full text from publisher

    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/13946/1/wp2001-25a.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Kitamura, Yukinobu & Takayama, Noriyuki & Arita, Fumiko, 2001. "Household savings in Japan revisited," Research in Economics, Elsevier, vol. 55(2), pages 135-153, June.
    2. Arnoud W. A. Boot & Anjan V. Thakor, 2000. "Can Relationship Banking Survive Competition?," Journal of Finance, American Finance Association, vol. 55(2), pages 679-713, April.
    3. Bodie, Zvi & Merton, Robert C. & Samuelson, William F., 1992. "Labor supply flexibility and portfolio choice in a life cycle model," Journal of Economic Dynamics and Control, Elsevier, vol. 16(3-4), pages 427-449.
    4. Marcus Miller & Joseph Stiglitz, 1999. "Bankruptcy Protection Against Macroeconomics Shocks: The case for a 'super Chapter 11'," CSGR Hot Topics: Research on Current Issues 08, Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    financial intermediary; financial system; banking; participation costs; intermediated ownership; wealth distribution;

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • N2 - Economic History - - Financial Markets and Institutions

    Statistics

    Access and download statistics

    Corrections

    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:hit:hitcei:2001-25. 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: (Reiko Suzuki). General contact details of provider: http://edirc.repec.org/data/cehitjp.html .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.