The Development of the Japanese Financial System -Previous Financial Reforms and Japan's ''Big Bang"

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Authors

Maeda, Shoko

Issue Date

1998

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Thesis

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en_US

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Abstract

A continuous sequence of financial changes - this is what the Japan's financial sector has been going through for a half of this century. In my Senior Individualized Project, characteristics of these changes in financial structures and financial regulations are first introduced, classified by different economic phases-the high growth period (the 1950s- 1973), two oil crises (1974 and 1979), the internationalized period (the 1980s), and the low growth period after the bubble burst in 1990. Now, after all these changes in the history of Japanese finance, you may well wonder why Prime Minister Ryutaro Hashimoto attempts to implement another financial reform. A replica of London's ''Big Bang," which radically transformed the British securities markets on a single day in 1986, the Hashimoto plans-Japan's "Big Bang"-proposes to construct 'more liberalized' financial markets and to create a 'fairer' trading regime than ever. Will this reform become a true ''Big Bang," or just remain one of the repeated financial reforms that often end prematurely and with unsatisfying results? This question still has to be answered, since the complete implementation is still to be carried out. However, what seems clear is that a sense of fear, confusion, and uncertainty is expressed by many, while the government appears to be determined to carry out the reforms. The Big Bang may be a superficial action by which the government tries to save its own "face" in the increasingly globalized economy and financial markets. While this paper surely cannot give definite answers to all these questions, it will provide a detailed description of the elements of Japan's Big Bang and assessments of the possible positive and negative outcomes of the recent reforms of financial system.

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vii, 131 p.

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