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Financial liberalization, speculative bubble and banking crisis in Japan

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  • Maria Luiza Levi

Abstract

This paper examines the institutional environment of the Japanese financial systemand its role in the asset price bubble and financial crisis. The deregulation process of the80s eliminated various rules that had previously been used by the government to monitorthe economic growth through monetary and credit policies. Banks turned to more risky operationsand, under a period of low interest rates, contributed to drive liquidity to speculativesectors, which were at the center of the asset bubble. The change in monetary policy putan end to the rise of asset prices and resulted in default of many borrowers. Since 1991 theJapanese banking sector is trying to absorb the huge volume of non-performing loans of itsportfolio related to this process. JEL Classification: F65; G18; G21.

Suggested Citation

  • Maria Luiza Levi, 1997. "Financial liberalization, speculative bubble and banking crisis in Japan," Brazilian Journal of Political Economy, Center of Political Economy, vol. 17(1), pages 43-64.
    • Handle: RePEc:ekm:repojs:v:17:y:1997:i:1:p:43-64:id:1157
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    File URL: https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/1157/1142
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    More about this item

    Keywords

    Bank crisis; liberalization; deregulation; globalization;
    All these keywords.

    JEL classification:

    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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