Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Acknowledgements
- 1 Introduction
- Part I Theory
- Part II The institutions and their policies
- Part III Empirical evidence
- 7 Amakudari in the private banking industry: an empirical investigation
- 8 Amakudari and the performance of Japanese banks
- 9 Conclusion: Informality, monetary policy and bank performance – lessons from the Japanese experience
- Bibliography
- Index
8 - Amakudari and the performance of Japanese banks
Published online by Cambridge University Press: 22 September 2009
- Frontmatter
- Contents
- List of figures
- List of tables
- Acknowledgements
- 1 Introduction
- Part I Theory
- Part II The institutions and their policies
- Part III Empirical evidence
- 7 Amakudari in the private banking industry: an empirical investigation
- 8 Amakudari and the performance of Japanese banks
- 9 Conclusion: Informality, monetary policy and bank performance – lessons from the Japanese experience
- Bibliography
- Index
Summary
To understand everything must mean to know nothing.
Old Buddhist sayingIntroduction
The objective of this chapter is to investigate further quantitatively the three aspects of the explanation of the presence of MoF and BoJ amakudari kanryō on the boards of private banks for the period 1975–1999 as described in chapter 7: patterned equalisation (or ‘buying influence’), bureaucratic intervention or ex-post monitoring in the context of prudential policy, and career management. These three elements will be formulated as hypotheses that will be tested using econometric techniques. Furthermore, I shall pay attention to certain possible negative effects of amakudari on the performance of Japanese private banks. In this respect, the element of patterned equalisation will be reformulated into a more negative version that departs from the notion that equalisation attempts could possibly lead to collusive practices involving former MoF and BoJ officials and private banks. Thus, the first hypothesis will concentrate on the behaviour of banks in terms of agency costs. This hypothesis is in line with Horiuchi and Shimizu (1998), Hanazaki and Horiuchi (1998) and Yamori (1998), where it is concluded that the mechanism of amakudari has led to ‘cosy’ relationships between supervisors and banks that most likely have undermined the effectiveness of Japanese prudential policy. The hypothesis can be explained as follows. Banks in trouble bid for the services of well-connected officials from the MoF/BoJ in order to receive support or regulatory forbearance.
- Type
- Chapter
- Information
- Informality and Monetary Policy in JapanThe Political Economy of Bank Performance, pp. 297 - 330Publisher: Cambridge University PressPrint publication year: 2002