IDEAS home Printed from https://ideas.repec.org/p/soa/wpaper/123.html
   My bibliography  Save this paper

BANK RENTS AND UNCERTAINTY. A Legacy of the Subjectivists

Author

Listed:
  • Yasushi Suzuki

    (Department of Economics, SOAS University of London, UK)

Abstract

Is it possible to bail Japan out of its lingering financial slump by the means of transition to an Anglo-American financial system and a convergence to Basel pragmatism? This paper argues that the imprudent convergence to an Anglo-American type management in credit risks without the preconditions for diversifying risks and uncertainty have problematically encouraged herd behaviors in lending by the Japanese banks. This paper also sheds light on the understated role of bank rents, which contributed to mediating financial resources to new industries and to pooling monitoring skills within banks. The ill-planned transition may have lost Japan the important components of the traditional “rent-based†monitoring system, which Japan should have reserved in alternative forms. One of these components was the role of transferring rents for incubating new enterprises. The other was giving lenders the incentive and time for developing what we call a relation-based non-algorithmic monitoring style.

Suggested Citation

  • Yasushi Suzuki, 2002. "BANK RENTS AND UNCERTAINTY. A Legacy of the Subjectivists," Working Papers 123, Department of Economics, SOAS University of London, UK.
    • Handle: RePEc:soa:wpaper:123
    as

    Download full text from publisher

    File URL: https://www.soas.ac.uk/sites/default/files/2022-10/economics-wp123.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mr. Sunil Sharma & Sushil Bikhchandani, 2000. "Herd Behavior in Financial Markets: A Review," IMF Working Papers 2000/048, International Monetary Fund.
    2. Dore, Ronald, 2000. "Stock Market Capitalism: Welfare Capitalism: Japan and Germany versus the Anglo-Saxons," OUP Catalogue, Oxford University Press, number 9780199240616.
    3. Yasushi Suzuki, 2001. "The Crisis of Financial Intermediation, Understanding Japan’s Lingering Economic Stagnation," Working Papers 116, Department of Economics, SOAS University of London, UK.
    4. Davis, E. Philip, 1995. "Debt, Financial Fragility, and Systemic Risk," OUP Catalogue, Oxford University Press, number 9780198233312.
    5. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yasushi Suzuki, 2005. "Uncertainty, financial fragility and monitoring: Will Basle-type pragmatism resolve the Japanese banking crisis?," Review of Political Economy, Taylor & Francis Journals, vol. 17(1), pages 45-61.
    2. Yasushi Suzuki, 2001. "The Crisis of Financial Intermediation, Understanding Japan’s Lingering Economic Stagnation," Working Papers 116, Department of Economics, SOAS University of London, UK.
    3. Fernando Nieto, 2007. "The determinants of household credit in Spain," Working Papers 0716, Banco de España.
    4. Alexandra Lai, 2002. "Modelling Financial Instability: A Survey of the Literature," Staff Working Papers 02-12, Bank of Canada.
    5. Kang‐Soek Lee & Richard A. Werner, 2023. "Are lower interest rates really associated with higher growth? New empirical evidence on the interest rate thesis from 19 countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 3960-3975, October.
    6. Rinaldi, Laura & Sanchis-Arellano, Alicia, 2006. "Household debt sustainability: what explains household non-performing loans? An empirical analysis," Working Paper Series 570, European Central Bank.
    7. E Philip Davis & Dilruba Karim & Dennison Noel, 2019. "Bank Leverage Ratios, Risk and Competition - An Investigation Using Individual Bank Data," National Institute of Economic and Social Research (NIESR) Discussion Papers 499, National Institute of Economic and Social Research.
    8. Stijn Claessens & M Ayhan Kose, 2018. "Frontiers of macrofinancial linkages," BIS Papers, Bank for International Settlements, number 95.
    9. De Bandt, Olivier & Hartmann, Philipp, 2000. "Systemic risk: A survey," Working Paper Series 35, European Central Bank.
    10. Katarzyna Dąbrowska-Gruszczyńska & Marcin Gruszczyński, 2009. "The introduction of the euro in the perspective of accession and the challenges of absorption," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 22.
    11. Klaus P. Fischer & Martin Chenard, 1997. "Financial Liberalization Causes Banking System Fragility," Finance 9706004, University Library of Munich, Germany.
    12. Marcel Canoy & Machiel van Dijk & Jan Lemmen & Ruud de Mooij & Jürgen Weigand, 2001. "Competition and stability in banking," CPB Document 15.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    13. Hansen, Jan, 2003. "Financial Cycles and Bankruptcies in the Nordic Countries," Working Paper Series 149, Sveriges Riksbank (Central Bank of Sweden).
    14. E. Philip Davis & Dilruba Karim, 2019. "Exploring short‐ and long‐run links from bank competition to risk," European Financial Management, European Financial Management Association, vol. 25(3), pages 462-488, June.
    15. Assaf Razin & Efraim Sadka & Chi-Wa Yuen, 1999. "An Information-Based Model of Foreign Direct Investment: The Gains from Trade Revisited," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(4), pages 579-596, November.
    16. Innes, Robert, 1987. "Adverse Selection And Tax Externalities In A Model Of Entrepreneurial Investment," Working Papers 225812, University of California, Davis, Department of Agricultural and Resource Economics.
    17. Li, Yuanyuan & Wigniolle, Bertrand, 2017. "Endogenous information revelation in a competitive credit market and credit crunch," Journal of Mathematical Economics, Elsevier, vol. 68(C), pages 127-141.
    18. Janvier D. Nkurunziza, 2005. "Reputation and Credit without Collateral in Africa`s Formal Banking," Economics Series Working Papers WPS/2005-02, University of Oxford, Department of Economics.
    19. Cowling, Marc, 2010. "The role of loan guarantee schemes in alleviating credit rationing in the UK," Journal of Financial Stability, Elsevier, vol. 6(1), pages 36-44, April.
    20. Weill, Laurent, 2011. "How corruption affects bank lending in Russia," Economic Systems, Elsevier, vol. 35(2), pages 230-243, June.

    More about this item

    Keywords

    Banking; Japan; Herding; Risk Management;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:soa:wpaper:123. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chandni Dwarkasing (email available below). General contact details of provider: https://edirc.repec.org/data/desoauk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.