The Japanese financial system

This course examines the development of Japan’s distinctive financial system, its difficulties during the long period of stagnation of the 1990s, reforms including the ‘Big Bang’ reform of 2001, and the recent emergence of restructured financial institutions including large international banks. These issues link with international developments outside Japan, in corporate finance, corporate governance, financial regulation including capital adequacy and risk management frameworks, technological change and contestable markets. They also link with wider economic issues within Japan, including the relation between financial and non-financial firms, macro-economic policies and problems, and political issues of reform; and with the internationalisation of Japanese non-financial firms especially within the wider region, including China and South-East Asia.

Objectives and learning outcomes of the module

The overall objectives of the course are to:

• describe and explain the changing nature of the Japanese financial system as part of the Japanese business environment in the high-growth and the low-growth periods
• analyse the importance of changes in the legal and regulatory framework for Japanese banking and capital markets
• analyse changes in the pattern of corporate financing in the high and low-growth periods (including international aspects)
• analyse the changing place of financial firms in relation to nonfinancial firms in keiretsu structures
• consider the functioning of the financial system from the point of view of the Japanese consumers/ households

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

• describe and explain institutional problems of Japanese financial firms during the late 1980s and 1990s low-growth period and institutional responses (eg mergers)
• explain the distinctive features of corporate financing in Japan in the high-growth period
• assess the character of Japanese financial 'deregulation' after the mid-1980s and contrast this with experience in other advanced capitalist countries
• Discuss examples of changed structures of interfirm organisation in keiretsu
• Analyse the role of international factors in the changing pattern of corporate finance in large companies
• Discuss with examples the experience of Japanese financial firms in international markets
• Discuss financial services for the Japanese consumer with international comparisons

Workload

Lectures
This module consists of a 1-hour weekly lecture over 10 weeks of term plus a revision lecture in term 3 as preparation for the final examination. Students will be supplied with a syllabus with a breakdown week by week of required and additional reading. Reading materials are usually accessed electronically from the BLE and students should come to class prepared.

Tutorials
This module also has a weekly 1-hour tutorial where the questions posed by the tutor relevant to the lecture are explored and discussed by the students. Students also prepare and deliver a short presentation.

Total Work load:
Students on this module will have 2 taught hours each week. Additionally, adequate personal study time should be allocated for reading and class preparation.

Method of assessment

Assessment for this module is in three elements:

1. One tutorial presentation at 10%
2. One essay of 2,500 words at 30%
3. One unseen 2-hour written examination at 60%

All elements except the presentation may be resubmitted.

Disclaimer

Important notice regarding changes to programmes and modules