Kimie Harada, Takeo Hoshi, Masami Imai, Satoshi Koibuchi and Ayako Yasuda
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…
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.