Analysis Of The Evolution Of The System By The Japanese Financial Ups And Downs

In the 1980s, Japan became the largest capital outflow country and the biggest creditor in the world, and Japanese banks became the controler of the world financial market, and created the financial miracle. But in the 1990's, followed by the collapse of the "bubble economy", the ever strong Japanese financial system fell into long depression. In order to restruct the financial system, Japanese government carried out many reforms, but all resulted little effect. The Japanes financial phenomenon attracted the whole world's attention, and many economists disscussied fiercely.This paper tries to analyse the deep reason of the evolution of Japanese financial system from the point of institution, and using the institution transition theory, which belongs to the new institution economics. The paper argues that the change of Japanese financial system from florious to depression, is mainly because the post-war financial institution, which regulated strictly and limited competition, and caused the large group which gained large profit from the institution, at last produced strong path dependence.This paper analyses the evolution of Japanese financial system mainly according to the time sequence and divides into two periods. The first period is the construction and development of the Japanese post-war financial institution(Postwar-1970's). In this part mainly introduces the fundamental features of the post-war financial institution, and analyses the institutoin cost of it. This institution was effective in that history period. But because it regulated so stirctly that caused great profit-earning group, and produced strong path-dependence.The second period is the Japanese financial liberalization and internationalization and bubble economy period(1970's-1980's). In this period, the traditional financial institution can't adapted to the economic development anymore, and needed reform imperatively. But as the maker of the policy and the leader of the reform are just the profit-earning group under the old institution, so they didn't want to reform at all. So appeared the typical North's paradox. And caused the appearance of the serious dispature between the domestic country and outside world, and which strengthened the bubble economy. Fellowed by the collapse of the bubble economy, the Japanese financial system fell into the long depression. And the long stagation of Japanesefinancial system shows a important lesson to the other countries is that the make and reform of financial institution must consider the adapative efficiency to the change of environment in the future, and the content of competition is the important part which decides a country's adapative efficiency.