Japanese Banking and Finance in the New Millennium

  • Rameshwar Tandon


Since the asset price bubble in the early 1990s, the Japanese economy has been stagnant from 1991 to 2004 and the banking sector has also been in trouble; as several observers recently suggested, monetary policy has not been as effective in restoring growth. The government over the years resorted to an expansionary monetary policy along with an expansionary fiscal policy. It is a pity that these standard tools have failed to help the economy. The notion that an important part of the problem is the result of attempts to reallocate resources in the wake of falling expectations of future growth, suggests that lifting expectations of future performance could now play crucial role. If the government could restore faith in Japan’s performance, private spending could also be revived; hence structural reforms and rehabilitation of the banking sector have an important role to play.


Monetary Policy Banking Sector Deposit Insurance Loan Loss Japanese Economy 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 2.
    Hugh Patrick, The Causes of Japan’s Financial Crisis, AJRC Research Center, Canberra, 1999Google Scholar
  2. 4.
    Brian Waterhouse, ‘Japanese Banking Sector’, briefing document, 15 June 1998Google Scholar
  3. 6.
    J. Levy, Resolving Japan’s Banking System Problems, Japan-selected Issues, IMF, 1998Google Scholar
  4. 8.
    See IMF, Survey, 15 Sept. 1998.Google Scholar
  5. 10.
    Hoshi and Kashyap, op. cit.; Patrick, op. cit.; Ito (1999); also M.J.B. Hall, ‘Banking Regulation and Supervision in Japan’, LSE Financial Markets Group Paper, May 2002.Google Scholar
  6. 11.
    See MOF, Outline for Emergency Power to Stabilize the Financial System, Tokyo, Feb. 1998Google Scholar
  7. 13.
    H. Nakaso, Recent Banking Sector Reforms in Japan, Economic Policy Review, Federal Reserve Bank of New York, 1999. Also DIC Annual Report 1999, Tokyo, Oct. 2001Google Scholar
  8. 19.
    L. Gower and D. Wilson, ‘Non-performing Assets and Capital Accumulation’. Working Papers in Economics and Econometrics No. 352, Australian National University, 1998Google Scholar
  9. 22.
    See BIS, ‘The Financial Crisis in Japan during the 1990s; How the Bank of Japan Responded and the Lessons Learnt’, BIS Papers No. 6, Basle, October 2001Google Scholar
  10. 28.
    Rishi Goyal and Ronald McKinnon, ‘Japan’s Negative Risk Premium in Interest Rates: the Liquidity Trap and Fall in Bank Lending’, paper presented at the Symposium: Japan’s Lost Decade: Origins, Consequences and Prospects for Recovery, University of Michigan, March 2002Google Scholar
  11. 34.
    I. Oishi and C. Towe, Governance, Deregulation and Economic Performance in Japan, Selected Issues, IMF Staff Country Report No. 98–113, 146–63, 1998Google Scholar
  12. 35.
    OECD, Economic Survey, Japan, 1999Google Scholar
  13. 37.
    See A. Horiuchi, ‘The Big Bang, Idea and Reality’, in T. Hoshi and Hugh Patrick (eds), Crisis and Change in the Japanese Financial System, Kluwer Academic, 2000, Dordrecht; also Z. Nakajima and H. Taguchi, ‘Towards a More Stable Framework; Long-term Alternatives — an Overview of Recent Bank Disruptions World-wide’, in K. Sakamoto et al., Financial Stability in a Changing Environment, St. Martins Press, New York, 41–99Google Scholar
  14. 39.
    BIS, Annual Report, Basle, 1999; also OECD, Economic Survey of Japan, 2000Google Scholar
  15. 41.
    Jenny Corbett, ‘Japan’s Banking Crisis in International Perspective’, in Masahiko Aoki and Garry R. Saxonhouse (eds), Finance, Governance and Competitiveness in Japan, Oxford, 2000, p. 152Google Scholar
  16. 43.
    See BOJ, Comparative Economic and Financial Statistics, Japan and other Major Countries. Bank of Japan, Tokyo, 2002Google Scholar
  17. 46.
    T. Hoshi and Anil Kashyap, Corporate Financing and Governance in Japan, MIT, 2002Google Scholar
  18. 47.
    See Terry Marsh and Jean Michel Paul, Japanese Banks’ Bad Loans; What Happened, OECD, Paris, 1996;Google Scholar
  19. also V. Beattie et al., Banks and Bad Debts; Accounting for Loan Loss in International Banking, Chichester, Wiley, 1995, pp. 41–99Google Scholar
  20. 50.
    Thomas F. Cargill, in M. Blomstrom, Japan’s New Economy; Continuity and Change in the 21st Century, OUP, 2001, p. 158Google Scholar

Copyright information

© Rameshwar Tandon 2005

Authors and Affiliations

  • Rameshwar Tandon

There are no affiliations available

Personalised recommendations