Book contents
- Frontmatter
- Contents
- Abbreviations
- List of Figures
- List of Tables
- List of Contributors
- Preface
- 1 Causes and Consequences of the Asian Financial Crisis
- 2 Capital Flows and Crises
- 3 The Political Economy of the Asian Financial Crisis: Korea and Thailand Compared
- 4 The Good, the Bad and the Ugly? Korea, Taiwan and the Asian Financial Crisis
- 5 Indonesia: Reforming the Institutions of Financial Governance?
- 6 Political Impediments to Far-reaching Banking Reforms in Japan: Implications for Asia
- 7 Dangers and Opportunities: The Implications of the Asian Financial Crisis for China
- 8 The International Monetary Fund in the Wake of the Asian Crisis
- 9 Taming the Phoenix? Monetary Governance after the Crisis
- 10 The Vagaries of Debt: Indonesia and Korea
- 11 The New International Financial Architecture and its Limits
- Notes
- Bibliography
- Index
6 - Political Impediments to Far-reaching Banking Reforms in Japan: Implications for Asia
Published online by Cambridge University Press: 05 June 2012
- Frontmatter
- Contents
- Abbreviations
- List of Figures
- List of Tables
- List of Contributors
- Preface
- 1 Causes and Consequences of the Asian Financial Crisis
- 2 Capital Flows and Crises
- 3 The Political Economy of the Asian Financial Crisis: Korea and Thailand Compared
- 4 The Good, the Bad and the Ugly? Korea, Taiwan and the Asian Financial Crisis
- 5 Indonesia: Reforming the Institutions of Financial Governance?
- 6 Political Impediments to Far-reaching Banking Reforms in Japan: Implications for Asia
- 7 Dangers and Opportunities: The Implications of the Asian Financial Crisis for China
- 8 The International Monetary Fund in the Wake of the Asian Crisis
- 9 Taming the Phoenix? Monetary Governance after the Crisis
- 10 The Vagaries of Debt: Indonesia and Korea
- 11 The New International Financial Architecture and its Limits
- Notes
- Bibliography
- Index
Summary
Ever since the collapse of a speculative asset bubble in 1991, Japanese banks have been burdened with enormous amounts of non-performing loans. The failure of Ministry of Finance (MOF) officials to tackle the problem aggressively had grave repercussions as macroeconomic policy mistakes sank the economy into prolonged recession and exacerbated the magnitude of bad bank loans. A full-blown financial crisis hit in 1997, following the collapse of the nation's tenth-largest bank and fourth-largest securities firm, and continued into late 1998. At the beginning of 1999, the amount of non-performing loans held by Japanese banks neared a trillion dollars.
This chapter argues that the financial crises in Japan and greater Asia were related in many ways. Japan's response to the Asian crisis was negatively affected by the incapacity of policy-makers to resolve the nation's own financial system woes in the years between the collapse of the bubble economy and the onset of the regional crisis in 1997. More specifically, the simultaneous presence of a financial system crisis in Japan meant that the Japanese government's proactive role in assembling aid and funding packages for the region was not matched by a similarly positive role by Japan's private sector. Japanese banks, corporations and consumers were reluctant – or simply incapable – to serve as major catalysts for regional recovery. Further, Japan's domestic policy choices for its own financial crisis have affected capital flows and investment patterns in Asia.
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- Publisher: Cambridge University PressPrint publication year: 2000
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