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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.

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).

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

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

The systematic risks related to credit financing has received significant attention in the academic domain during and after any financial crisis. However, the role of insurance has not been adequately studied in the context of crises. The extant literature also shows that the scale of credit financing depends upon the availability of credit insurance and on the policy orientation. Past evidence shows that demand for credit insurance was significantly high during the crisis period. Therefore, this chapter proposes to study the role of various combinations of these two aspects near the period of crisis. The findings of this chapter are based on the outcomesof previous research articles on these topics. The research articles are gathered from various online databases for the years 2000–2014 for the G7 economies. This chapter has alsoincluded facts from contextual policy documents on monetary and fiscal policies where it finds them necessary. Broadly, this chapter describes the role of policies when two mutually dependent industries interact and adversely impact market equilibrium.