Banking Crisis and the Japanese Legal Framework

Institute for Monetary and Economic Studies, Bank of Japan Discussion Paper No. 2017-E-2

81 Pages Posted: 23 Mar 2017

See all articles by Ignacio Tirado

Ignacio Tirado

Universidad Autónoma de Madrid; European Banking Institute

Date Written: March 18, 2017

Abstract

This paper presents an overview of the Japanese system to deal with the distress of banks, providing a classification of the regulation and remedies based on the level of systemic risk of the troubled entity. The paper differentiates between the types of actions available and analyses in detail the instruments and their application. While the regulation is disperse and its apprehension is complicated for a foreign reader, Japan counts on a modern, thorough and adequate group of institutions and instruments to tackle bank distress. Its most notable feature is the proportionality of measures and the flexibility enjoyed by a resolution authority that may accommodate its intervention to the characteristics of the case and the degree of contagion risk. Although mainly inspired by the American model, the system is compared with the new European framework and FSB recommendations are considered. Although a few elements could be reconsidered, its high institutional level and flexibility make the Japanese system one capable of dealing with financial crises at both national and international levels.

Keywords: Bank Crisis; Bank Resolution; Central Bank; Bank Supervision; Early Action; Insolvency; Financial Sector

JEL Classification: G20, G21, G28, G33, G34, G38, K20, K22, K23, K33, E42, E44, E50, E58, F30, F33, F34, F65

Suggested Citation

Tirado, Ignacio, Banking Crisis and the Japanese Legal Framework (March 18, 2017). Institute for Monetary and Economic Studies, Bank of Japan Discussion Paper No. 2017-E-2. Available at SSRN: https://ssrn.com/abstract=2939555 or http://dx.doi.org/10.2139/ssrn.2939555

Ignacio Tirado (Contact Author)

Universidad Autónoma de Madrid ( email )

Campus de Cantoblanco
Madrid, Madrid 28049
Spain

European Banking Institute ( email )

Frankfurt
Germany

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