JAPAN’S FINANCIAL CRISIS IN 1992 AND UNBALANCED INCENTIVES

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Abstract

In this paper the author analyzes corporate governance in the wake of a financial crisis. In Section 1, the author will explain why the banking crises occurred and how we can avoid them in the future. And in Section 2, there will be discussion on Japan’s financial crises in 1990s, focusing on why Japan’s financial authorities delayed efforts to resolve the NPL issue and why they did not try to expand the monetary base. The bank supervision authority (Ministry of Finance at that time) and financial institutions had incentives to delay the disposal of bad loans. They wanted to cloud their responsibilities by delaying the disposal. Their strategy had the desired effect, as many escaped their responsibilities because of the delay.

Keywords: Financial Crisis, Corporate Governance, Unbalanced Incentives, Japan

How to cite this paper: Harada, Y. (2014). Japan’s financial crisis in 1992 and unbalanced incentives. [Conference issue]. Corporate Ownership & Control, 11(3-2), 388-398. https://doi.org/10.22495/cocv11i3conf2p1