Japan's Financial Crisis

by Amyx, Jennifer

• ISBN13: 9780691114477
• ISBN10: 0691114471
• Format: Hardcover
• Copyright: 2004-08-30
• Publisher: Princeton Univ Pr

Summary

At the beginning of the 1990s, a massive speculative asset bubble burst in Japan, leaving the nation's banks with an enormous burden of nonperforming loans. Banking crises have become increasingly common across the globe, but what was distinctive about the Japanese case was the unusually long delay before the government intervened to aggressively address the bad debt problem. The postponed response by Japanese authorities to the nation's banking crisis has had enormous political and economic consequences for Japan as well as for the rest of the world. This book helps us understand the nature of the Japanese government's response while also providing important insights into why Japan seems unable to get its financial system back on track 13 years later. The book focuses on the role of policy networks in Japanese finance, showing with nuance and detail how Japan's Finance Ministry was embedded within the political and financial worlds, how that structure was similar to and different from that of its counterparts in other countries, and how the distinctive nature of Japan's institutional arrangements affected the capacity of the government to manage change. The book focuses in particular on two intervening variables that bring about a functional shift in the Finance Ministry's policy networks: domestic political change under coalition government and a dramatic rise in information requirements for effective regulation. As a result of change in these variables, networks that once enhanced policymaking capacity in Japanese finance became "paralyzing networks"--with disastrous results.

Table of Contents

List of Figures	ix
List of Tables	xi
Abbreviations	xiii
A Note on Conventions	xv
Acknowledgments	xvii
Introduction	1	(10)
Networks and State Performance	11	(30)
Part I: Contours of Japan's Financial Policy Networks
Finance Ministry Ties with the Political Arena	41	(20)
Finance Ministry Ties with Private and Quasi-governmental Financial Institutions	61	(24)
Finance Ministry Ties with Other Government Agencies and the Central Bank	85	(22)
Part II: Evolution of Network-based Regulation
Institutional ``Fit'' for Rapid Growth	107	(21)
Slowed Growth, Institutional Rigidity, and Reforms Postponed	128	(19)
Network-managed Forbearance after the ``Bubble'' Bursts	147	(16)
Policy Paralysis amid Deepening Crisis	163	(34)
Part III: Institutional Change and System Transition
A New Regulatory and Policymaking Paradigm	197	(31)
Why Can't Japan Get Back on Track?	228	(28)
Conclusion	256	(7)
Appendices	263	(30)
Notes	293	(48)
Bibliography	341	(20)
Index	361