Japan's financial problems

Article Abstract:

Much of the financial troubles of Japan has been the result of years of government regulation of interest rates to ensure profit for large corporations. The Japanese financial sector was heavily guided by government regulatory bodies. There was no room other influencing factors responsible for the normal growth of a financial system, such as banking, stock markets, bond markets and other forms of financial papers. These stock and bond markets were emasculated in favor of bank and insurance company intermediation.

Analysis

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What do cross-country studies teach about government involvement, prosperity, and economic growth?

Article Abstract:

A study reviews available findings on the effects of government on economic activity. The costs and benefits of government are difficult to evaluate because several of the goals of government intervention are not directly related to traditional gauges of economic activity. Current knowledge on the relationship between real government activity and private behavior is found to be far from satisfactory. However, the situation may be greatly improved.

Research, Economic development, Industrial policy

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Comment and discussion (2)

Article Abstract:

The major financial problems which the Japanese economy is facing did not occur because the government regulated every economic activity. It was because the government hardly regulated the financial system where it was needed the most, the credit system. Some of the loan officials became corrupt and, later, grew lax on big loans that did not pay on time. The neglected loans incapacitated the credit system, which led to macroeconomic repercussions.

Financial services industry, Financial services

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