| In November 1996,Japan's Primer Minister Hashimoto announced that Japan would adopt a plan for a series of centralized reforms in Japanese financial system during the subsequent 5 years(form 1997 to 2001).Being full-scale and thorough reforms,they are also called Japan's finance big bang(Japan's kinyu biggu ban).The reason why such reforms could be undertaken to change the financial system, by which a high-speed economic growth had been bolstered in Japan, is as follows: the Japanese have recognized the fact that the institutional problems were at the root of the crisis in wake of the burst of bubble economy in 1990s and the subsequent lasting recession, and the petrifaction of financial system was at the heart of all the problems, though not the only one. Without a full-scale reform, Japan would never get out of the recession.There are four parts in the essay:I. The current state of the Japanese economy after the bursting of the bubble economy, and the main characteristics of the recession.Japan's economy got into the phase with the worst recession at the turning point of the bursting of the bubble economy in May 1991.It is more important for us that the recession has indicated not only the end of "Japan's Miracle" but also its many social problems, which were piled up but concealed behind the economic miracles during the post-war years. At the same time, it has also brought about a series of important reforms such as the financial system reforms. We can notice that the following characteristics in the recession:*The duration of the recession is long, and the extent is great.*Many financial institutions have failed, and financial crisis has broken out across-the-board.*Macroeconomic policies do not work properly, and the economic recovery is slow.II. The petrification of financial system: a deep-seated cause of Japan's recession.Although the causes for such a recession are many, the root is institutional, and the petrification of the system is its deep-seated reason, as well as the issue that the "Big bang" reforms want to solve. Japan's financial system, which formed based on the special background inside and outside Japan, and with characteristics of the "convoy system" , indirect financial structure and the "main bank lending" system, had worked very well in the course of its postwar economic recovery and development. However, some factors, including the inertia of the system ,the forming of some vested-interest groups and the behavior of "rent seeking", brought about the petrification of financial system, under which the financial system could not acclimatize itself to a new condition. On one hand, the strategy of its institutions' management and the level of its supervision can not acclimatize themselves to the environment, and the maladjustment resulted in the increasing of bad assets and expanding of "bubble economy", and at last the emergence of the financial crisis. On the other hand, the crisis of "grudging loan" resulted from the banking crisis has also been an obstacle to get out of recession. It is obvious that the institutional problem has gotten Japan into the most serious recession after the Second World War-namely, the petrification of the system has resulted in financial crisis and then aggravated it, and the recession in turn has become a main obstacle for its financial institutions to get out of the dilemma.III. Japan's financial Big Bang: the major reforms to deal with the country's financial system problemThe vicious circle between Japan's financial crisis and its recession indicates that Japan's financial system has not been able to adjust by itself, and has lost the function of supplying capital for the enterprises. Reforming the current financial system is an important task lying in front of the Japanese government during the 1990s.Japanese Big Bang financial reforms, which were carried out by the cabinet of hashimoto in the mid-1990s,were based on the background that the reforms in a gradual way has failed, the financial crisis has hampe... |
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