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Department of Financial & Management Studies (DeFiMS)

FINANCE IN JAPAN AND KOREA

Course Code:
151030021
Unit value:
0.5
Year of study:
Year 3 of 3 or Year 4 of 4
Taught in:
Term 2

This course is specially designed to provide students with the knowledge to understand the financial systems in Japan and Korea, including banking systems, enterprise financing, stock markets, bond markets, exchange rates and monetary policy. It provides students with a fundamental understanding of how financial institutions work in these countries, as well as the challenges that integration into the global financial system bring. It outlines the key features of both countries banking systems, how they are regulated and the features that distinguish them from other banking systems. Given the specific challenges faced by both countries significant emphasis is place on the causes of the Asian Financial Crisis and Japan’s “Lost Decade” of growth. Specific emphasis is also place on the unique features of both countries in terms of capital market financing and the role of stock markets. The course concludes by examining the pervasiveness of local systems and practices versus the incentives and resistance to adopting international financial practices and techniques.

Prerequisites

A prerequisite for this course is Financial Strategy 151030012 in Term 1

Objectives and learning outcomes of the course

At the end of the course students should be able to:

  • Discuss the key features of financial market development in Japan & Korea
  • Explain the key characteristics of Japanese and Korean banking systems, the features that distinguish them from other international banking systems and assess the contribution it makes to the development of their economies
  • Understand the financial reasons for financial crisis in the economies of the region and the major reforms to corporate governance and financial regulation that have since taken place
  • Outline the key features of capital market development in Japan and Korea and discuss the different challenges faced by both countries in terms of enterprise financing, developing liquid stock markets and bond markets.
  • Critically evaluate the relationship between domestic and international financial markets and assess the efforts of the both countries to regulate capital flow and mitigate the effects of financial contagion
  • Discuss the role of monetary policy in both countries and assess it impact on trade, investment and growth.
  • Evaluate the prospects of convergence with international practice and assess its implications for Japan & Korea

Method of assessment

This course is assessed by 30% written coursework and 70% by one two hour examination

Suggested reading

Indicative Readings:

  • Allen, F and G Dale (2000) Comparing Financial Systems, Cambridge MA: MIT Press
  • Aoki, M and H Patrick (eds) (1994) The Japanese Main Bank System, Oxford: OUP
  • Chang, S J  (2003) Financial Crisis and Transformation of Korean Business Groups:  The Rise and Fall of Chaebol.  Cambridge: CUP
  • Fan, J M Hanazaki, and J Teranishi (eds) (2004) Designing Financial Systems in East Asia and Japan,  London: Routledge Curzon.
  • Hoshi, T and A Kashyap (2001) Corporate Financing and Governance in Japan: The Road to the Future.  CambridgeMA: MIT PRESS.
  • Hoshi, T and H Patrick (2000) Part 3 of Crisis and Change in the Japanese Financial System.  Boston and London: Kluwer Academic Publishers Kim, P  (2007) The Korean Financial System.  London: Cussands
  • McKinnon, R.I. (1991), The Order of Economic Liberalization: Financial Control in the Transition to a Market Economy, London and Baltimore: The John Hopkins University Press.
  • Nishimura, S and L S Pressnell (1973)  Money and Banking in Japan.  London: Macmillan.
  • Stiglitz, Joseph (1989) ‘Financial Markets and Development’, Oxford Review of Economic Policy, Vol. 5: 55–68.
  • Tsutsui, W M (ed) 1999  Banking in Japan, London: Routledge.