Integration of Financial Markets in Japan and Asia —Financial Deepening in Asia due to Japanese Banks’ Entry—

Mitsuru Yaguchi, Ayako Yamaguchi and Koji Sakuma
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Mitsuru Yaguchi: General Manager and Chief Economist at the Economic Research Department and Emerging Economy Research Department,Institute for International Monetary Affairs
Ayako Yamaguchi: Senior Economist at the Economic Research Department, Institute for International Monetary Affairs
Koji Sakuma: Professor of Faculty of English and Global Communication at Kyoto Tachibana University/ Visiting Researcher at the Institute for International Monetary Affairs

Public Policy Review, 2018, vol. 14, issue 5, 835-870

Abstract: Looking back at Japanese banks’ activities in Asia since the 1980s, we see that they have steadily expanded credit provision and other business operations amid the growing sophistication of needs while Euro-Area banks have restrained their activities in the region, particularly since the global economic and financial crisis in 2007-2008. Above all, in the ASEAN (Association of Southeast Asian Nations) region, Japanese banks have actively pursued the acquisition of capital or business alliances with local banks since around 2012 in order to capture the increasingly sophisticated and diverse needs of the region. As a result, in the field of financial services for retail and corporate customers, there have been spillovers of financial technology from Japanese banks to the local banks which they have acquired or with which they have formed alliances. In the retail sector in particular, financial techniques have been transferred from financially developed countries to financially underdeveloped countries through the international networks of local banks which Japanese banks have acquired or with which they have formed alliances. Moreover, when local banks are acquired by Japanese banks, the level of know-how concerning the business administration as broadly defined, including adaptation to global financial regulations and national legislative framework, is immediately raised to a level equivalent to the Japanese level. We may also point out the possibility that as those local banks’ activities serve as best practices, their effects may spread throughout the relevant countries through the financial supervisory authorities. As described above, in a sense, Japanese banks’ entry into Asia contributes to the region’s financial deepening. This may be taken as evidence that the integration of financial markets in Japan and Asia is gradually proceeding at the financial institution level.

Keywords: Asia; overseas business expansion; spillover effects; banks; financial technology; ASEAN; acquisition; alliance (search for similar items in EconPapers)
JEL-codes: G15 G21 O16 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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