The Recent Internationalization of Japanese Banks

We investigate the changing role and direction of Japanese bank internationalization with an emphasis on the period from 1995 to 2008. In recent years Japan has gone from being a net receiver of international bank lending of US$230 billion (1995) to a net lender to international banks of US$235 billion (2008). The analysis of international bank positions demonstrates that (a) Japanese banks significantly reduced their international exposures to mitigate the effects of their failed loans in the Asia-Pacific region; (b) European integration has been associated with enhanced claims, while during the same period Japanese claims were reduced; (c) Japanese bank internationalization appears to be at odds with customer-related motivations, although such a low-risk strategy would be consistent with sociocultural or geographic influences, the effects of asymmetries in information, and risk aversion. Finally, we can add to existing facts concerning the differences between domestic and international banking.