Informality and Monetary Policy in Japan: The Political Economy of Bank Performance

Cover......Page 1
Half-title......Page 3
Title......Page 5
Copyright......Page 6
Dedication......Page 7
Contents......Page 9
Figures......Page 11
Tables......Page 12
Acknowledgements......Page 15
1.1 Aims......Page 19
1.2 Method......Page 21
1.3 Outline......Page 22
Part I Theory......Page 27
2.1 Introduction......Page 29
2.2 The Japanese political economy......Page 32
The ‘Japan, Inc.’ model......Page 33
Pluralistic model......Page 34
Consensual policy model......Page 35
Conclusions......Page 37
2.3 The Japanese economic system......Page 38
The interventionist school......Page 39
The market school......Page 42
Summary of interventionist and market schools......Page 43
Hybrid interpretations......Page 44
2.4 Conclusions......Page 48
3.1 Introduction......Page 51
3.2 The alleged importance of informality in Japan......Page 55
Definition and classification......Page 58
Compliance......Page 63
Criticism......Page 66
Relevance of administrative guidance in theoretical schools......Page 68
3.4 Informal aspects II: informal networks......Page 69
Amakudari......Page 72
3.5 Summary and conclusions......Page 86
Summary......Page 87
Conclusions......Page 89
Business corporations (jigyodan)17......Page 91
Others (sono hoka) 37......Page 92
Privatised Public Corporations (7 as of October 1995)......Page 94
4.2 Monetary policy......Page 95
4.3 Informality and monetary policy......Page 96
Informality and macro monetary policy......Page 97
Informality and micro monetary policy......Page 99
Corporate governance and prudential policy: the Japanese context......Page 101
4.4 Conclusions......Page 105
Part II The institutions and their policies......Page 107
5.1 Introduction......Page 109
5.2 The post-war financial system......Page 111
5.3 Depository financial institutions......Page 115
Legal framework......Page 117
Personnel: informal networks......Page 119
Macro monetary policy......Page 128
Micro monetary policy: prudential policy......Page 135
5.5 The Bank of Japan (BoJ)......Page 141
Legal framework......Page 142
Personnel: informal networks......Page 144
Macro monetary policy......Page 147
Micro monetary policy: prudential policy......Page 150
5.6 Conclusions......Page 151
Table of Contents......Page 153
Article 4......Page 154
Article 5 (authority )......Page 163
Appendix 5.2 The pre-1998 organisation of the MoF......Page 166
Appendix 5.3 The pre-1998 organisation of the BoJ......Page 176
6.1 Introduction......Page 183
6.2 Financial reform: the experience of the seventies and eighties......Page 185
6.3 The rise and collapse of the ‘bubble’ economy......Page 188
6.4 The policy response: forbearance and financial reform......Page 193
Phase I (1990–June 1996): initial policy response......Page 203
Phase II (June 1996–January 1997): administrative and financial reform......Page 212
Phase III (January 1997–January 1998): the end of ‘too big to fail’......Page 217
Phase IV (January 1998–June 1998): scandals, injection of public funds and financial reform......Page 222
Phase V (June 1998–October 1998): administrative reform and intensifying crisis......Page 230
Phase VI (October 1998–June 2000): financial revitalisation–the end of the crisis?......Page 240
Phase VII (July 2000– ): further administrative reform – consolidation of prudential policy......Page 261
6.5 Conclusions......Page 264
Part III Empirical evidence......Page 271
7.1 Introduction......Page 273
7.2 Data sources on amakudari......Page 274
7.3 Analysis of data......Page 277
Patterned equalisation......Page 293
Bureaucratic intervention......Page 295
Career management......Page 298
7.5 Comparison of empirical findings with more recent data......Page 309
7.6 Conclusions......Page 312
8.1 Introduction......Page 315
8.2 Amakudari, prudential policy and corporate governance......Page 317
Data and dependent variables......Page 320
8.4 Empirical results......Page 326
8.5 The effect of amakudari on bank performance......Page 335
8.6 The detrimental effects of amakudari......Page 337
8.7 Conclusions......Page 342
Dependent variables......Page 345
Independent variables in all data sets......Page 346
Additional independent variables in data sets 2 and 3......Page 348
9.1 Introduction......Page 349
9.2 The Japanese banking crisis: what went wrong......Page 351
9.3 Policy effectiveness: the limitations of informal instruments......Page 356
9.4 Amakudari and prudential policy: too close for comfort......Page 367
9.5 Lessons from the Japanese experience......Page 372
Bibliography......Page 377
Index......Page 410