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

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

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    How Finance Is Shaping the Economies of China, Japan, and Korea
    Book Description:

    This volume connects the evolving modern financial systems of China, Japan, and Korea to the development and growth of their economies through the first decade of the twenty-first century. It also identifies the commonalities among all three systems while accounting for their social, political, and institutional differences.

    Essays consider the reforms of the Chinese economy since 1978, the underwhelming performance of the Japanese economy since about 1990, and the growth of the Korean economy over the past three decades. These economies engaged in rapid catch-up growth processes and share similar economic structures. Yet while domestic forces have driven each country's financial trajectory, international short-term financial flows have presented opportunities and challenges for them all. The nature and role of the financial system in generating real economic growth, though nuanced and complex, is integral to these countries. The result is a fascinating spectrum of experiences with powerful takeaways.

    eISBN: 978-0-231-53646-2
    Subjects: Business, Finance, Economics, History

Table of Contents

  1. Front Matter
    (pp. I-IV)
  2. Table of Contents
    (pp. V-VI)
  3. Preface
    (pp. VII-X)
  4. Acknowledgments
    (pp. XI-XIV)
    Hugh Patrick
  5. CHAPTER ONE An Introductory Overview
    (pp. 1-43)

    THE ECONOMIC and financial systems of Japan, Korea, and China represent outstanding examples of very successful catch-up economic development and growth, major financial development, and gradual financial liberalization of initially highly repressed financial systems in an increasingly open global financial system. These are major achievements both for their citizens and for the world.

    This book provides an analysis of that financial development process and how it has intertwined with the process of real economic growth in complex and nuanced, as well as obvious, ways.

    The central theme is what role the financial system has played. That is, in what ways,...

  6. CHAPTER TWO Financial Reform in China Progress and Challenges
    (pp. 44-142)

    CHINA’S ECONOMIC reforms since 1978 probably have delivered as many puzzles as miracles. The Chinese economy has been extraordinarily successful in achieving strong growth. Yet it is different in many aspects from the typical set of “good economic institutions” prescribed by textbook economics. China does have a very open economy. But, rather than having private property rights, a well-developed legal system, and liberalized financial sector, it has a communist government, state monopoly in key economic sectors, and financial repression.

    This can be recast as two interesting combinations relating to China’s economic development and financial reform: (1) high levels of quantitative...

  7. CHAPTER THREE Japan Ongoing Financial Deregulation, Structural Change, and Performance, 1990–2010
    (pp. 143-224)

    FINANCIAL SECTOR evolution in Japan provides a different story than that of Korea or China during the 1990–2010 period. By 1990 Japan had already experienced considerable deregulation in financial markets. Although Japan had a period of considerable financial repression after World War II, that era was over before 1990. With deregulation, the way was open to gradually shift away from a bank-centered financial system toward one with greater reliance on capital markets. In addition, as the largest and most advanced economy and financial sector in East Asia, expectations were high that Tokyo would become a regional, even international, financial...

  8. CHAPTER FOUR Financial Development and Liberalization in Korea: 1980–2011
    (pp. 225-301)

    ONE OF the more salient features of financial development in Korea over the three decades since 1980 has been financial market liberalization and opening. It has attracted a great deal of interest, largely because Korea has been successful in building a market-oriented financial system in the wake of the 1997–1998 financial crisis. This is notwithstanding a series of financial turbulences that includes the bursting of a credit card lending boom in 2003, a real estate boom-bust in 2003–2007, a liquidity crisis in 2008, and a run on savings banks in 2011.

    Clearly, financial liberalization does not provide a...

  9. CHAPTER FIVE Banking, Capital Flows, and Financial Cycles Common Threads in the 2007–2009 Crises
    (pp. 302-346)

    FINANCIAL GLOBALIZATION has a mixed record. This chapter seeks to make sense of the reasons for this and to diagnose the specific factors involved in the boom-bust cycles associated with rapidly increasing capital inflows.

    The global financial crisis that began in 2007 engulfed not only the advanced economies, but it also spread to emerging markets that were not directly implicated in the erosion of lending standards and other practices associated with the crisis. Open economies in Asia felt the impact of the spreading crisis beginning in the fourth quarter of 2008, evoking memories of the dark days of the Asian...

  10. Index
    (pp. 347-364)