The Japanese Main Bank System: Its Relevance for Developing and Transforming Economies

The Japanese Main Bank System: Its Relevance for Developing and Transforming Economies

The Japanese Main Bank System: Its Relevance for Developing and Transforming Economies

The Japanese Main Bank System: Its Relevance for Developing and Transforming Economies

Synopsis

• Gives a definitive description and analysis of the main bank system
• Strong contributors
• Understudied subject
• Incorporates results of a major World Bank research programme
• Balances institutional description with financial theory and empirical analysis This volume looks at systems of corporate finance, concentrating on the Japanese main bank system. The remaining chapters describe different systems, assessing to what extent the Japanese system can serve as a model for developing market economies and transforming socialist economies. The basic characteristics of the main bank system are examined here, its roots, development, and its role in the heyday of its rapid growth. The volume looks at how the system has performed and at its strengths and weaknesses. It goes on to look at how the system has changed and what itsapproprate role is as deregulation, liberalization, and internationalization of Japan's financial markets have proceeded over the past two decades and a new issue securities market has emerged. A basic conclusion of the book is that banking-based systems are in most cases the most appropriate for industrial financing until a rather late stage of a country's economic and financial development. It aims to identify the conditions under which banks are better able that securites marketinstitutions to evaluate the credit worthiness of borrowers and the viability of new projects, to monitor the ongoing performance of firms, and to rescue or liquidate firms in distress. Contributors: Masahiko Aoki, Theodor Baums, V. V. Bhatt, John Campbell, Yasushi Hamao, Toshihiro Horiuchi, Takeo Hoshi, Anil Kashyap, Dong-Wong Kim, Gary Loveman, Sang-Woo Nam, Frank Packer, Hugh Patrick, Yingyi Qian, Mark Ramseyer, Clark Reynolds, Satoshi Sunamura, Paul Sheard, Juro Teranishi,Kazuo Ueda,

Excerpt

The World Bank's research programme is intended to provide information and guidance to the Bank's member countries and to its own operational staff on different development processes and policies as they apply across a wide range of countries. the topics covered are also wideranging.

It is in this context that a considerable amount of research has been done under a Program for the Study of the Japanese Development Management Experience financed by the Policy and Human Resources Development Trust Fund established at the World Bank by the Government of Japan. the programme is managed by the Studies and Training Design Division of the World Bank's Economic Development Institute.

Under this programme the Japanese development experience has been given close attention, especially the early post-war experiences that helped transform the country from a wartime command economy to a market economy which has yielded today's economic superpower. the programme analyses the key features of the Japanese financial system and its evolution, with particular reference to the main bank system of long-term relationships among the banks and their borrowers. It also examines the role of the Japanese state as agent for development and the implications of the Japanese experience for the comparative understanding of the state in other developing countries.

Until now, very little has been published outside of Japan about the relationship among banks, borrowers, and government—a potentially important topic for economies undergoing financial reforms and restructuring of the interface between the public and the private sectors. The Japanese Main Bank System is intended to help policy-makers and analysts better understand the issues they may currently be facing as they attempt to develop efficient and effective financial systems. the book describes, analyses, and evaluates the Japanese main bank system, and examines its relevance as a model for the developing market economies and transforming socialist economies.

The authors offer their findings and conclusions to readers in the developing world for their consideration as they seek solutions to the challenges they confront.

Michael Bruno

Vice President, Development Economics and Chief Economist

The World Bank

Washington dc

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