Corporate Financing and Governance in Japan
In this book, Takeo Hoshi and Anil Kashyap examine the history of the Japanese financial system, from its nineteenth-century beginnings through the collapse of the 1990s that concluded with sweeping reforms. Combining financial theory with new data and original case studies, they show why the Japanese financial system developed as it did and how its history affects its ongoing evolution.
The authors describe four major periods within Japan's financial history and speculate on the fifth, into which Japan is now moving. Throughout, they focus on four questions: How do households hold their savings? How is business financing provided? What range of services do banks provide? And what is the nature and extent of bank involvement in the management of firms? The answers provide a framework for analyzing the history of the past 150 years, as well as implications of the just-completed reforms known as the "Japanese Big Bang."
Hoshi and Kashyap show that the largely successful era of bank dominance in postwar Japan is over, largely because deregulation has exposed the banks to competition from capital markets and foreign competitors. The banks are destined to shrink as households change their savings patterns and their customers continue to migrate to new funding sources. Securities markets are set to re-emerge as central to corporate finance and governance.
About the Authors
Takeo Hoshi is Professor of Economics in the Graduate School of International Relations and Pacific Studies at the University of California, San Diego.
Anil K Kashyap is Edward Eagle Brown Professor of Economics and Finance and Richard N. Rossett Faculty Fellow at the University of Chicago Booth School of Business. He is the coauthor of Corporate Financing and Governance in Japan: The Road to the Future (MIT Press, 2001).
—Ben S. Bernanke, Howard Harrison and Gabrielle Snyder Beck Professor of Economics and Public Affairs, Princeton University
—Takatoshi Ito, Professor, Hitotsubashi University
—Masahiko Aoki, Professor Emeritus, Stanford University, and President-Elect, the International Economic Association
45th Nikkei Prize for Excellent Books in Economic Science, presented by the Japan Center for Economic Research and Nihon Keizai Shimbun Inc. on November 5, 2002, 2002