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Japan’s financial regulatory responses to the global financial crisis

Kimie Harada (Faculty of Commerce, Chuo University, Tokyo, Japan and; Tokyo Center for Economic Research (TCER), Tokyo, Japan)
Takeo Hoshi (Asia Pacific Research Center, Stanford University, Stanford, California and; National Bureau of Economic Research (NBER), Cambridge, MA, USA and; Asian Bureau of Finance and Economic Research (ABFER), Singapore)
Masami Imai (Wesleyan University)
Satoshi Koibuchi (Faculty of Commerce, Chuo University, Tokyo, Japan and; Tokyo Center for Economic Research (TCER), Tokyo, Japan)
Ayako Yasuda (Graduate School of Management, University of California, Davis, California, USA)

Journal of Financial Economic Policy

ISSN: 1757-6385

Article publication date: 7 April 2015

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Abstract

Purpose

This paper aims to understand Japan’s financial regulatory responses after the global financial crisis and recession. Japan’s post-crisis reactions show two seemingly opposing trends: collaboration with international organizations to strengthen the regulation to maintain financial stability, and regulatory forbearance for the banks with troubled small and medium enterprise [SME] borrowers. The paper evaluates the responses by the Japanese financial regulators in five areas (Basel III, stress tests, over-the-counter [OTC] derivatives regulation, recovery and resolution planning and banking policy for SME lending) and concludes that the effectiveness of the new regulations for financial stability critically depends on the willingness of the regulators to use the new tools.

Design/methodology/approach

This report evaluates the post-crisis responses by the Japanese financial authorities in five dimensions (Basel III, stress tests, OTC derivatives regulations, recovery and resolution planning and bank supervision).

Findings

The effectiveness of the new regulations for financial stability critically depends on the willingness of the regulators to use the new tools.

Originality/value

The paper is the first attempt to evaluate the financial regulatory trends in Japan after the global financial crisis.

Keywords

Citation

Harada, K., Hoshi, T., Imai, M., Koibuchi, S. and Yasuda, A. (2015), "Japan’s financial regulatory responses to the global financial crisis", Journal of Financial Economic Policy, Vol. 7 No. 1, pp. 51-67. https://doi.org/10.1108/JFEP-12-2014-0077

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited