The Legislative Dynamic: Evidence from the Deregulation of Financial Services in Japan

26 Pages Posted: 19 Aug 2002

See all articles by Yoshiro Miwa

Yoshiro Miwa

Osaka Gakuin University

J. Mark Ramseyer

Harvard Law School

Date Written: July 2002

Abstract

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 distress.

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.

JEL Classification: F21, G28, K23, L13, L52, O23

Suggested Citation

Miwa, Yoshiro and Ramseyer, J. Mark, The Legislative Dynamic: Evidence from the Deregulation of Financial Services in Japan (July 2002). Available at SSRN: https://ssrn.com/abstract=324601 or http://dx.doi.org/10.2139/ssrn.324601

Yoshiro Miwa

Osaka Gakuin University ( email )

2-36-1 Kishibe-Minami
Suita, Osaka 5645811
Japan

J. Mark Ramseyer (Contact Author)

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
617-496-4878 (Phone)
617-496-6118 (Fax)

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