Recapitalizing Japan's Banks : the functions and problems of financial revitalization act and bank recapitalization act

概要

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The origin of the systemic problem of Japanese financial sector was the asset price bubble in the 1980s. In late 1997 when Sanyo Securities, Hokkaido Takushoku Bank and Yamaichi Securities failed successively. These sudden and disorderly failures created a panic among financial sectors because all the three institutions satisfied stipulated capital requirements under the regulations before the failures. In view of this sever problem, politicians finally moved quickly and two long-term credit banks were nationalized and large-scale bank recapitalization was carried out in early 1999 under two new laws legislated in late 1998; Financial Revitalization Act and Bank Recapitalization Act. This paper explains the economic roles of these new laws and examine the way they were actually implemented. Financial Revitalization Act is a special law regarding the resolution of insolvent deposit financial institution. Bank Recapitalization Act, on the other hand, concerns the capital injection to those financial institutions which are solvent, but losing the confidence of investors and depositors so that they are facing difficulties to raise capital in the market on their own.
慶應義塾大学の論文