The Electoral Foundations of Japan's Financial Politics: The Case of Jusen

28 Pages Posted: 11 Jul 2008

See all articles by Frances McCall Rosenbluth

Frances McCall Rosenbluth

Yale University - Department of Political Science

Michael F. Thies

University of California, Los Angeles (UCLA) - Department of Political Science

Date Written: 2001

Abstract

This paper locates Japan's financial policies in the context of electoral incentives. The collapse of Japan's economic bubble in 1990 exposed the rot in the banking system, hidden for decades by a Liberal Democratic Party (LDP) government intent on maintaining favor with local support groups, and protecting inefficient small banks. In a move wholly uncharacteristic of Japan's postwar politics, the LDP ultimately forced the banks to absorb huge losses rather than require taxpayers to bail out their mortgage-lending subsidiaries (jusen). We compare the government's subsequent bank bailout scheme with past government action and find that the government's objectives have shifted from boosting bank profits to ensuring their prudential regulation. We conclude on an optimistic note about the prospects for more public-goods oriented politics in Japan.

Suggested Citation

Rosenbluth, Frances McCall and Thies, Michael F., The Electoral Foundations of Japan's Financial Politics: The Case of Jusen (2001). Available at SSRN: https://ssrn.com/abstract=1158646 or http://dx.doi.org/10.2139/ssrn.1158646

Frances McCall Rosenbluth

Yale University - Department of Political Science ( email )

Box 208269
New Haven, DC 06520-8269
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203-432-5256 (Phone)

Michael F. Thies (Contact Author)

University of California, Los Angeles (UCLA) - Department of Political Science ( email )

405 Hilgard Ave.
Los Angeles, CA 90095-1472
United States
310-825-1976 (Phone)
310-825-0778 (Fax)

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