At the beginning of the 1990s, a massive speculative asset
bubble burst in Japan, leaving the nation's banks with an enormous
burden of nonperforming loans. Banking crises have become
increasingly common across the globe, but what was distinctive
about the Japanese case was the unusually long delay before the
government intervened to aggressively address the bad debt problem.
The postponed response by Japanese authorities to the nation's
banking crisis has had enormous political and economic consequences
for Japan as well as for the rest of the world. This book helps us
understand the nature of the Japanese government's response while
also providing important insights into why Japan seems unable to
get its financial system back on track 13 years later.
The book focuses on the role of policy networks in Japanese
finance, showing with nuance and detail how Japan's Finance
Ministry was embedded within the political and financial worlds,
how that structure was similar to and different from that of its
counterparts in other countries, and how the distinctive nature of
Japan's institutional arrangements affected the capacity of the
government to manage change.
The book focuses in particular on two intervening variables that
bring about a functional shift in the Finance Ministry's policy
networks: domestic political change under coalition government and
a dramatic rise in information requirements for effective
regulation. As a result of change in these variables, networks that
once enhanced policymaking capacity in Japanese finance became
"paralyzing networks"--with disastrous results.
Subjects: Political Science, Finance, History
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