Lessons From Japan’s Banking Crisis, 1991–2005

9271 words - 37 pages

ADBI Working Paper 222 Fujii and Kawai
ADBI Working Paper Series
Lessons from Japan's Banking Crisis,
1991-2005
Mariko Fujii and Masahiro Kawai
No. 222 June 2010
Asian Development Bank Institute

ADBI Working Paper 222 Fujii and Kawai
Mariko Fujii is a professor at the Research Center for Advanced Science and Technology, University of Tokyo. Masahiro Kawai is the dean at the Asian Development Bank Institute. This is a revised version of the paper presented at the W. G. Hart Workshop on "Law Reform and Financial Markets", organized under the ESRC World Economy and Finance Research Programme, in London, 24-25 June 2009, and at the conference on the "Global Financial and Economic Crisis: Impacts, Lessons and Growth Rebalancing," organized by the Asian Development Bank Institute in Tokyo, 22-23 April 2009. The authors are grateful to comments provide by several conference participants. The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of ADBI, the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.
The Working Paper series is a continuation of the formerly named Discussion Paper series; the numbering of the papers continued without interruption or change. ADBI's working papers reflect initial ideas on a topic and are posted online for discussion. ADBI encourages readers to post their comments on the main page for each working paper (given in the citation below). Some working papers may develop into other forms of publication.
Suggested citation:
Fujii, M., and M. Kawai. 2010. Lessons from Japan's Banking Crisis,
1991-2005. ADBI Working Paper 222. Tokyo: Asian Development Bank Institute. Available:
http://www.adbi.org/working-paper/2010/06/29/3922.lessons.japan.banking.crisis.1991.2005/
Please contact the author(s) for information about this paper.
Asian Development Bank Institute Kasumigaseki Building 8F 3-2-5 Kasumigaseki, Chiyoda-ku Tokyo 100-6008, Japan Tel: +81-3-3593-5500 Fax: +81-3-3593-5571 URL: www.adbi.org E-mail: info@adbi.org © 2010 Asian Development Bank Institute

ADBI Working Paper 222 Fujii and Kawai
Abstract: The Japanese government's response to the financial crisis in the 1990s was late, unprepared and insufficient; it failed to recognize the severity of the crisis, which developed slowly; faced no major domestic or external constraints; and lacked an adequate legal framework for bank resolution. Policy measures adopted after the 1997-1998 systemic crisis, supported by a newly established comprehensive framework for bank resolution, were more decisive. Banking sector problems were eventually resolved by a series of policies implemented from that period, together with an export-led economic recovery. Japan's...

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