Financial liberalization, speculative bubble and banking crisis in Japan

Maria Luiza Levi ()

Brazilian Journal of Political Economy, 1997, vol. 17, issue 1, 43-64

Abstract: This paper examines the institutional environment of the Japanese financial systemand its role in the asset price bubble and financial crisis. The deregulation process of the80s eliminated various rules that had previously been used by the government to monitorthe economic growth through monetary and credit policies. Banks turned to more risky operationsand, under a period of low interest rates, contributed to drive liquidity to speculativesectors, which were at the center of the asset bubble. The change in monetary policy putan end to the rise of asset prices and resulted in default of many borrowers. Since 1991 theJapanese banking sector is trying to absorb the huge volume of non-performing loans of itsportfolio related to this process. JEL Classification: F65; G18; G21.

Keywords: Bank crisis; liberalization; deregulation; globalization (search for similar items in EconPapers)
Date: 1997
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