- The Legislative Dynamic: Evidence from the Deregulation of Financial Services in Japan
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- by Ramseyer, J. Mark; Miwa, Yoshiro
- In many ways, the current financial distress in Japan traces itself
to the limited range of non-bank financial intermediaries available. That limited
availability is itself a creature of regulation. By examining the recent deregulation
of commercial paper issues by financial intermediaries, we explore the dynamics of
the regulatory process that originally contributed to—if not caused—the current
We also use this case study to explore the dynamics of the Japanese
legislative and regulatory process more generally. We characterize deregulation as a
bargain between banks and the newer non-bank intermediaries: the banks
acquiesced to commercial paper issues by non-banks, while the non-banks agreed to
the regulatory jurisdiction of the Ministry of Finance. The non-banks obtained a
cost-effective way to raise additional funds; the banks brought their new competitors
within their regulatorily enforced cartel. At a specific level, the dynamics illustrate
the classic Stiglerian theory of regulation; at a more general level, they illustrate the
trans-national economic logic to the Japanese legislative and regulatory process.
- Publication Type: WCFIA Working Paper
- Published Date: July 2002
- Field of Interest: International Economics
- Ramseyer, Mark, and Yoshiro Miwa. "The Legislative Dynamic: Evidence from the Deregulation of Financial Services in Japan." Working Paper 2008-0099, Weatherhead Center for International Affairs, Harvard University, July 2002.
- Also John M. Olin Center for Law, Economics, and Business, Working Paper no. 373.