How Finance Is Shaping the Economies of China, Japan, and Korea by Hugh Patrick

Author:Hugh Patrick
Language: eng
Format: mobi
Tags: -
Publisher: Columbia University Press
Published: 2013-10-04T00:00:00+00:00

TABLE 3.10

Important Policy and Legal Changes Affecting Financial Development

Source: Adapted from Schaede 2008, 14 and 15.

For the financial sector, the major development was the Big Bang reform, announced in 1996. These reforms had the dual purpose of promoting efficiency and stability in the financial sector (encouraging a shift away from banks toward capital markets) and of making Tokyo a more significant international financial center. The Big Bang involved many small, individual changes, although some were codified in 1997 in the Foreign Exchange Law and the Financial System Reform Law.

The list of individual regulatory changes associated with the Big Bang is quite extensive, occurring over the five years from 1997 to 2001. (For a detailed list of all these reforms, and a careful analysis of their impact, see Shirai 2009, 130–78.)

According to Shirai, the reforms had four motivations. The first was a belief that greater internationalization of Japanese financial markets would enable more efficient allocation of financial resources within Japan. The second was to promote growth and development of the domestic financial sector itself in order to help increase overall economic growth. Third, the government hoped Japan could play a larger role as an Asian financial hub, to the benefit of the whole region. Fourth, with the reforms, the government hoped Japanese financial institutions would be better positioned to play a leading role in promoting Asian regional financial development.

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