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Author: Mr.Steven M. Fries Publisher: International Monetary Fund ISBN: 1451954301 Category : Business & Economics Languages : en Pages : 52
Book Description
With the recent collapse of the asset price “bubble,” Japanese banks encountered significant pressure from both a sharp decline in the value of equity holdings and a marked increase in bad loans. In August 1992, the Government initiated measures that stabilized equity prices and assisted banks in managing their nonperforming loans. While the major banks disclosed that 4.6 percent of their total loans were nonperforming at the end of FY 1992, a mechanical estimate of all banks’ nonperforming and restructured loans is 6-7 percent of their total loans--a serious yet manageable problem. The main policy implications are to ensure the reasonably prompt resolution of the bad loan problem and to enhance market discipline to prevent its recurrence.
Author: Amy Basile Publisher: ISBN: Category : Languages : en Pages :
Book Description
Asset prices rose rapidly in Japan during the latter half of the 1980s, and then declined as quickly in the early 1990s. The increases in stock and land prices during this period exceeded the growth that would be consistent with changes in their fundamental determinants and are evidence of the existence of speculative bubbles. This paper investigates the dynamic relationships among stock and land prices in Japan, output, and monetary and bank lending variables. We first model and empirically trace stock and land market bubbles. We then estimate vector autoregressions (VARs) for two time periods: 1971-85 and 1986-91, the bubble period. We use these models to perform tests of causality among the variables and to report the results of variance decompositions. The price bubbles affected each other in the first period, although this impact is dependent on the choice of variables in the VARs. In the bubble period, there is strong evidence that the stock market bubble was determined by its own past and also influenced the land market bubble, accounting for a significant proportion of the variance of the land market bubble. These results are robust with respect to model specification. However, neither output, the money supply nor the bank lending variables were significant in the causality tests or in explaining the variation of the two asset bubbles.
Author: Mr.Steven M. Fries Publisher: International Monetary Fund ISBN: 1451954301 Category : Business & Economics Languages : en Pages : 52
Book Description
With the recent collapse of the asset price “bubble,” Japanese banks encountered significant pressure from both a sharp decline in the value of equity holdings and a marked increase in bad loans. In August 1992, the Government initiated measures that stabilized equity prices and assisted banks in managing their nonperforming loans. While the major banks disclosed that 4.6 percent of their total loans were nonperforming at the end of FY 1992, a mechanical estimate of all banks’ nonperforming and restructured loans is 6-7 percent of their total loans--a serious yet manageable problem. The main policy implications are to ensure the reasonably prompt resolution of the bad loan problem and to enhance market discipline to prevent its recurrence.
Author: Mr.Tamim Bayoumi Publisher: International Monetary Fund ISBN: 9781557758729 Category : Business & Economics Languages : en Pages : 246
Book Description
What caused Asia's largest economy, once the envy of the world, to lag behind many of the other industrial countries? And why did it take so long for Japan to recover from the bursting of its asset price bubble of the late 1980s? In this volume, a team from the International Monetary Fund examines the causes of the lingering economic problems of Japan, the crisis in its banking system, the reasons for weak business investment, and the government's efforts to kick-start the economy through a series of stimulus packages. This book presents a compelling story about Japan's economy. Its message - that banking reform and corporate restructuring are central to any sustained revival of the economy- is backed up through detailed background research. This research provided the analytical framework for the IMF's policy advice during a period of rapid change--a period during which macroeconomic policymaking moved into uncharted territory. The research papers were prepared by members of the Japan team in the IMF during 1998 and the first half of 1999.
Author: Takatoshi Itō Publisher: ISBN: Category : Japan Languages : en Pages : 72
Book Description
This paper examines the stock and land price behaviors during the bubble economy period (the second half of the 1980s), paying considerable attention to the linkage of the two markets and the effects of monetary policy. In particular, we examine whether the booms in these asset prices can be justified by changes of the fundamental economic variables such as the interest rates or the growth of the real economy. A complex chain of events is needed to explain the process of asset price inflation and deflation. Our empirical results suggest (i) that the initial increases of asset prices are sown by a sharp increase in bank lending to real estate; (ii) that a considerable comovement between stock and land prices is consistent with a theory that emphasizes the relationship between the collateral value of land and cash flow for constrained firms; (iii) that although the real economy was doing well and the interest rates were still low, asset price increases from mid-1987 to mid-1989 cannot be fully justified by the movement of fundamentals alone; and (iv) the stock price increase in the second half of 1989 and the land price increase in 1990 is not explained by any asset pricing model based on fundamentals or rational bubbles.
Author: Ryōichi Mikitani Publisher: Peterson Institute ISBN: 9780881322897 Category : Business & Economics Languages : en Pages : 256
Book Description
Japan is only one of many industrialized economies to suffer a financial crisis in the past 15 years, but it has suffered the most from its crisis--as measured in lost output and investment opportunities, and in the direct costs of clean-up. Comparing the response of Japanese policy in the 1990s to that of US monetary and financial policy to the American Savings and Loan Crisis of the late 1980s sheds light on the reasons for this outcome. This volume was created by bringing together several leading academics from the United States and Japan--plus former senior policymakers from both countries--to discuss the challenges to Japanese financial and monetary policy in the 1990s. The papers address in turn both the monetary and financial aspects of the crisis, and the discussants bring together broad themes across the two countries' experiences. As the papers in this Special Report demonstrate, while the Japanese government's policy response to its banking crisis in the 1990s was slow in comparison to that of the US government a decade earlier, the underlying dynamics were similar. A combination of mismanaged partial deregulation and regulatory forebearance gave rise to the crisis and allowed it to deepen, and only the closure of some banks and injection of new capital into others began the resolution. The Bank of Japan's monetary policy from the late 1980s onward, however, was increasingly out of step with US or other developed country norms. In particular, the Bank of Japan's limited response to deflation after being granted independence in 1998 stands out as a dangerous and unusual stance.
Author: Douglas D. Evanoff Publisher: Oxford University Press ISBN: 019984433X Category : Business & Economics Languages : en Pages : 481
Book Description
The realities of the recent financial crisis have intensified theoretical modeling, empirical methodologies, and debate on policy issues surrounding asset price bubbles. Choosing to take a novel approach, the editors of this book have selected five classic papers that represent accepted thinking about asset bubbles prior to the financial crisis. They also include original papers challenging orthodox thinking and presenting new insights. A summary essay by the editors highlights the lessons learned and experiences gained since the crisis.
Author: Ryozo Himino Publisher: Springer Nature ISBN: 9811595984 Category : Business & Economics Languages : en Pages : 127
Book Description
This open access book provides a readable narrative of the bubbles and the banking crisis Japan experienced during the two decades between the late 1980s and the early 2000s. Japan, which was a leading competitor in the world’s manufacturing sector, tried to transform itself into an economy with domestic demand-led mature growth, but the ensuing bubbles and crisis instead made the country suffer from chronicle deflation and stagnation. The book analyses why the Japanese authorities could not avoid making choices that led to this outcome. The chapters are based on the lectures to regulators from emerging economies delivered at the Global Financial Partnership Center of the Financial Services Agency of Japan.
Author: Takeo Hoshi Publisher: Springer Science & Business Media ISBN: 1461543959 Category : Business & Economics Languages : en Pages : 326
Book Description
At the start of the twenty-first century, the Japanese financial system is undergoing a major transformation. This process is spurred by a sense of crisis. Dominated by large institutions, the Japanese banking system has suffered from serious problems with non-performing loans since the early 1990s, when the Japanese stock market and urban real estate market both crashed. Delays in responding to these twin asset bubbles, by both regulatory authorities and the banks themselves, made matters worse and led to a banking crisis in late 1997 and early 1998. Not anticipating this setback, in late 1996 the Japanese government inaugurated its Big Bang of comprehensive financial deregulation designed to complete the process of creating `free, fair, and open financial markets'. Beginning in late 1998 and early 1999 the government finally embarked on a major rehabilitation of the Japanese banking system, including making available some Yen 60 trillion (approximately USD 500 billion) of government funds to recapitalize fifteen major banks, adequately fund the deposit insurance program, and write off the bad loans of nationalized or bankrupted banks. One result of this reform process is that the Ministry of Finance (MOF), which dominated Japanese financial system policy for most of the post-war period, has been stripped of most of its former regulatory powers. The purpose of this book is to describe, analyze, and evaluate the process that is transforming the Japanese financial system. The chapters address various issues relating to the transition of the Japanese financial system from a bank-centered and relationship-based system to a competitive market-based system. Questions taken up include: Why did Japanese banks get into such serious trouble? Why has the MOF lost its immense power? How will the Big Bang's financial deregulation further change the Japanese financial system, including the huge government financial institutions and postal savings system? What are some of the broader implications of this transition? The book is divided into three parts: Part I considers the origins of Japan's banking crisis; Part II focuses on five particularly important areas of major actual and potential changes; Part III addresses the effects of the Big Bang, including its potential systemic externalities. Taken together, this book offers an unusually up-to-date, comprehensive and thorough appraisal and evaluation of the profound changes occurring in Japan's financial system.
Author: Mr.Steven M. Fries
Author: Amy Basile
Author: Mr.Steven M. Fries
Author: Mr.Tamim Bayoumi
Author: William Curt Hunter
Author: Takatoshi Itō
Author: Ryōichi Mikitani
Author: Kunio Okina
Author: Douglas D. Evanoff
Author: Ryozo Himino
Author: Takeo Hoshi