Japan's Financial System: Revisiting the Relationship between Corporations and Financial Institutions

Alen N. BERGER

Senior Economist, Financial Studies Section, Division of Research and Statistics, The Federal Reserve Board

Allen N. Berger is Senior Economist at the Board of Governors of the Federal Reserve System and Senior Fellow at the Wharton Financial Institutions Center. Dr. Berger also currently serves on the Board of Directors of the Financial Management Association and the editorial boards of seven professional economics and finance journals. He is past editor of the Journal of Money, Credit, and Banking and has co-edited six special issues of various journals.

Dr. Berger has published more than 100 professional economics and finance articles, including papers in the Journal of Political Economy, American Economic Review, Journal of Monetary Economics, Journal of Finance, and Journal of Financial Economics. His research covers a variety of topics related to financial institutions. He received a Ph.D. in Economics from the University of California, Berkeley in 1983, and a B.A. in Economics from Northwestern University in 1976.

FUJII Yoshihiro

Senior Staff Writer, Economic News Department, Editorial Bureau, Nihon Keizai Shimbun, Inc.

As Senior Staff Writer for the Nihon Keizai Shimbun, Mr. Fujii mainly covers financial matters both domestic and overseas. Since joining Nikkei after he graduated from Osaka City University in 1972, he has covered various areas such as the Ministry of Finance (MOF), Bank of Japan (BOJ), and Ministry of the Environment (MOE). From 1988-1991, Mr. Fujii worked at Nikkei's London office. He has written numerous books on financial affairs.

HIRAI Hirohide

Director, Corporate Finance and Tax Affairs Division, Business Environment Department, Small and Medium Enterprise Agency, METI

Before his current position, Mr. Hirai held numerous deputy director positions within METI, including in the Cabinet Office, Office of the Director for Manufacturing Industries Policy, Basic Industry Bureau, Industrial Finance Division, Manufacturing Industries Bureau etc. and also held positions at the Agency for Natural Resources and Energy. He graduated from the law faculty of The University of Tokyo and London School of Economics.

HIROSE Sumio

Assistant Professor, Faculty of Economics, Shinshu University

Before assuming his current position after completing Ph.D. coursework in Economics at The University of Tokyo, Professor Hirose was researcher at the Financial Research and Training Center of the Financial Services Agency, and also at the International Finance Group of the JBIC Institute. He received his M.A. in Economics from The University of Tokyo, and a B.A. in Economics from Waseda University.

HORIUCHI Akiyoshi

Professor, Faculty of Policy Studies, Chuo University

Prior to assuming his current post at Chuo University, Professor Horiuchi held teaching and research positions at numerous institutions including The University of Tokyo, Hitotsubashi University, Yokohama National University, Australian National University, the London School of Economics and the Brookings Institution. He is also a counselor at the Bank of Japan and chairperson of the 2nd Subcommittee of the Financial System Council at the Financial Services Agency. Professor Horiuchi holds an M.A. in Economics from The University of Tokyo.

IWATA Kazumasa

Deputy Governor, Bank of Japan

Mr. Iwata assumed his current position as deputy governor of Bank of Japan in March 2003. Previously, he was a Director-General in charge of economic assessment and policy analysis for the Japanese Cabinet Office and a Professor at the Department of Advanced Social and International Studies at The University of Tokyo. During his academic career, he served as a visiting professor at the University of Alberta and at Yale University.

KAWAKAMI Naotaka

Director for Banks Division II, Supervisory Bureau, Financial Services Agency

Prior to his current position, Mr. Kawakami was Director for Japan Financial Intelligence Office, and (concurrently) Director for Communication and Policy, Coordination and Planning Bureau, Financial Services Agency, and before that, Director for Property Tax Policy, Tax Bureau, and Director for Overall Coordination, Minister's Secretariat, Ministry of Finance. He was also Visiting Fellow at the Center on Japanese Economy and Business, Columbia Business School, Columbia University. He obtained his Bachelor of Law from The University of Tokyo.

MATSUO Junsuke

Professor, Faculty of Business Administration, St. Andrew's University

Professor Matsuo is Professor of Business Administration at St. Andrew's (Momoyama Gakuin) University in Osaka. His main areas of specialization include the Securities Market, Investment Funds, and Distressed Investments. He graduated from Kyoto University Postgraduate School of Economics in 1988. Professor Matsuo has worked at Yamaichi Securities and the Japan Securities Research Institute. He obtained his Ph.D. in Economics from Kyoto University in 1999. He has been a part-time lecturer at Kyoto University, Osaka City University and Kwansei Gakuin University. His main work is "Corporate Bond Market in Japan" (Toyo Keizai Shinposha 1999) and he has co-translated the books, The Vulture Investors (by Hilary Rosenberg) and Strong Managers, Weak Owners (by Mark Roe).

OGAWA Kazuo

Professor, Institute of Social and Economic Research, Osaka University

Professor Ogawa earned his Ph.D. in Economics at the University of Pennsylvania, 1982. He has also held a number of positions: 1983-'95 Assistant Professor and Associate Professor, Faculty of Economics, Graduate School of International Cooperation Studies, Kobe University; 1984-'86 Research Economist, Institute of Fiscal and Monetary Policy, Ministry of Finance; 1986-'87 Visiting Scholar, Department of Economics, Yale University; 1991-2000 Appointed Member of Economic Councils; 1992-'94 Chief Research Economist, Economic Research Institute, Economic Planning Agency; 1995-present Professor, Institute of Social and Economic Research, Osaka University; 1998-'99 Visiting Scholar, Department of Economics, University of California, San Diego; 2001-'03 Director, Institute of Social and Economic Research, Osaka University; 2004-present Program Officer, Research Center for Science Systems, Japan Society for the Promotion of Science.

OIKAWA Kozo

Chairman, RIETI

Prior to his current position, Mr. Oikawa served as Senior Executive Director, Development Bank of Japan (2003-'05); Advisor, Nomura Research Institute, Ltd. (2002-'03); Research Counselor, TEPIA (2002-'03); Commissioner, Japan Patent Office; Director-General, Bureau of Equipment, Japan Defense Agency; Director-General for Policy Coordination, Minister's Secretariat; Councilor, Cabinet Secretariat; Deputy Director-General for Security Export Control, International Trade Administration Bureau; Director, Coordination Division, Bureau of Equipment, Japan Defense Agency; Director, Small Enterprise Policy Division, Small and Medium Enterprise Agency; Counselor, Japanese Mission to European Community, Ministry of Foreign Affairs; Director, Paper, Pulp & Printing Division, Consumer Goods Industries Bureau. Mr. Oikawa graduated from The University of Tokyo with a B.A. in Economics.

OKINA Yuri

Chief Senior Economist, Economics Department, The Japan Research Institute, Ltd.

Ms. Okina is also Director (part-time) at the Industrial Revitalization Corporation of Japan, and a Member of the Financial System Council, Financial Services Agency. She was previously Invited Professor at Keio University Graduate School and Deputy Senior Economist, Japan Research Institute. She joined the Bank of Japan after obtaining her B.A. and M.B.A. from Keio University.

ONO Arito

Senior Economist, Mizuho Research Institute Ltd.

Before joining Mizuho Research Institute, Dr. Ono held positions at Fuji Research Institute Corporation. He holds a Ph.D. in Economics from Brown University. His main fields of research are Banking and Finance, International Finance, and Political Economy. Major publications in English include, "The Current Status of Small Business Credit Scoring in Japan: based upon survey evidence on its use by Japanese banks," Mizuho Research Paper, August 2005, "On the Role of a Regional Lender of Last Resort," IDE-JETRO APEC Working Paper, March 2004, "A Cure Worse than the Disease? Involving the Private Sector in Emerging Market Crises," Fuji Research Paper, July 2002, "The Political Economy of Branching Restrictions: Menu Auction Approach," Paper presented at the Annual Spring Meeting of the Japan Society of Monetary Economics, May 2001

Mark M. SPIEGEL

Vice President, International Research / Director, Center for Pacific Basin Studies, Federal Reserve Bank of San Francisco

Mark Spiegel is Vice President, International Research and Director of the Center for Pacific Basin Studies at the Federal Reserve Bank of San Francisco. Prior to joining the Federal Reserve, he served as an Assistant Professor in the Department of Economics at New York University. He has served as a Visiting Professor in the Economics Department of U.C. Berkeley, as well as a Lecturer at the Haas School of Business at U.C. Berkeley. He has also served as a Consultant at the World Bank, as a Visiting Scholar at the Bank of Japan, and as Chairman of the Federal Reserve System Committee on International Economic Analysis. He is currently Associate Editor of the journal Japan and the World Economy. Mr. Spiegel received his Ph.D. in Economics from the University of California at Los Angeles (UCLA). He has published numerous articles in both academic and policy-oriented journals on international financial issues.

TAGASHIRA Shoichi

Professor, Law School, Sophia University

Prior to his current position, Professor Tagashira taught at the Law School and Faculty of Law of Sophia University, and Okayama University and also was Visiting Scholar at Cornell Law School. He completed Ph.D. coursework at the Graduate Division of Law, Kobe University.

TAKATA Hajime

General Manager / Chief Strategist, Fixed Income Research Dept., Fixed Income Group, Mizuho Securities Co., Ltd.

Mr. Takata joined the Industrial Bank of Japan in 1982. He holds a M.Sc. in Economic Development from the University of Oxford, and a B.A. in Economics from The University of Tokyo.

TSURU Kotaro

Senior Fellow, RIETI

Prior to appointment to his current post at RIETI, Dr. Tsuru was Research Economist at the Institute of Monetary and Economic Studies, Bank of Japan (2000-'01); Staff Economist, Economics Department, OECD, Paris (1995-2000); and Government Economist, Economic Planning Agency of Japan (1984-'95). His research includes Japan's Corporate Governance, Financial System and Banking Behavior. He has received his D. Phil. in Economics from the University of Oxford (St. Antony's College).

Major Works: "Depositors' selection of banks and the deposit insurance system in Japan: Empirical evidence and its policy implications," RIETI Discussion Paper 03-E-024; "The choice of lending patterns by Japanese banks during the 1980s and 1990s: The causes and consequences of a real estate lending boom," BOJ/IMES, Discussion Paper, 2001; "Japanese corporate governance in transition," Seoul Journal of Economics, Vol.13, 2000

TSUTSUI Yoshiro

Faculty Fellow, RIETI / Professor, Institute of Social and Economic Research, Osaka University

Professor Tsutsui is also Director, Research Center for Behavioral Economics in the Institute of Social and Economic Research, Osaka University. Prior to his current position, he held numerous teaching and research positions including: University of California, San Diego (Abe Fellow); Faculty of Economics, Osaka University; Institute for Posts and Telecommunications Policy, Ministry of Posts and Telecommunications; Faculty of Economics, Nagoya City University;Yale University (Fulbright Junior Researcher) Prior to that he taught physics at high schools in Osaka and Kanagawa prefectures. Professor Tsutsui holds a Ph.D. in Economics from Osaka University.

UCHIDA Hirofumi

Associate Professor of Banking and Finance, Faculty of Economics, Wakayama University

Hirofumi Uchida is Associate Professor of Banking and Finance at Wakayama University. He was also a visiting scholar at the Kelley School of Business, Indiana University as a Fulbright Scholar in 2003. He has published many professional economics and finance articles including papers in the Journal of Banking and Finance, European Finance Review and Japanese Economic Review. His research interests are in Banking, Financial Institutions and Financial System Architecture. He received a Ph.D. in Economics from Osaka University in 1999, and an M.A. in Economics from Osaka University in 1995.

Gregory F. UDELL

Bank One Chair of Banking and Finance, Kelley School of Business, Indiana University

Before joining Indiana University Dr. Udell was a Professor of Finance at New York University. He has been a Visiting Scholar at the Bank of Japan, the Board of Governors of the Federal Reserve and the Federal Reserve Bank of Chicago. Professor Udell has published numerous articles and books including two textbooks on commercial banking. He is also on the editorial boards of seven academic journals, a member of the Boards of Directors of the Financial Management Association and the Georgetown University Credit Research Center, and a member of the Academic Advisory Board of the Turnaround Management Association. Prior to his academic career he was Vice President of Marina Bank in Chicago and a Commercial Loan Officer at the National Boulevard Bank, also in Chicago. He received his Ph.D. in Finance from Indiana University.

UEMURA Shuichi

Senior Fellow , RIETI

Prior to his current position, Mr. Uemura was with the Bank of Japan where he held the positions of General Manager of the Oita Branch; Head of Economic Research Division; Economist and Senior Economist, Research and Statistics Department; and Manager, Secretary Office. Prior to that he was also stationed at the London Office, Money Market Operation Department, and Osaka Branch. He has also been assigned to the Banking Bureau, Ministry of Finance. Mr. Uemura graduated from the Faculty of Law of The University of Tokyo.

UESUGI Iichiro

Fellow, RIETI

Before joining RIETI, Dr. Uesugi was assigned to the Macroeconomic Affairs Division, Economic and Industrial Policy Bureau at METI; Planning Divison, Coal Department, Agency of Natural Resources and Energy; and Research Division, Industrial Policy Bureau, MITI. He obtained his Ph.D. in Economics from the University of California, San Diego, and Bachelor in Economics from The University of Tokyo. His major works include: "Does Trade Credit Substitute for Bank Loans? Evidence from Japanese SMEs," (in Japanese) JCER Economic Journal, Vol.52, 2005; "Trading Company Finance in Japan," International Journal of Business, forthcoming; "Measuring the Liquidity Effect: The Case of Japan, " Journal of the Japanese and International Economies, Vol.16, No.3, 2002

WATANABE Tsutomu

Faculty Fellow, RIETI / Professor, Institute of Economic Research, Hitotsubashi University

Prior to his current position, Professor Watanabe was Associate Professor at the Institute of Economic Research, Hitotsubashi University, and before then served at the Bank of Japan. He holds a Ph.D. from Harvard University. His areas of expertise are: Monetary policy; International Finance and Corporate Finance. Selected publications and papers include: "Optimal Monetary Policy at the Zero Interest Rate Bound: The Case of Endogenous Capital Formation," (with Tamon Takamura and Takeshi Kudo) COE/RES Discussion Paper Series, 2005; "Firm Age and the Evolution of Borrowing Costs: Evidence from Japanese Small Firms," (Koji Sakai and Iichiro Uesugi), RIETI Discussion Paper, 2005; "Optimal monetary policy at the zero-interest-rate bound" (with Jung Taehun and Yuki Teranishi)Journal of Money, Credit, and Banking, 2005; "Monetary and Fiscal Policy in a Liquidity Trap: The Japanese Experience 1999-2004." (with Mitsuru Iwamura and Takeshi Kudo) In Monetary Policy with Very Low Inflation in the Pacific Rim, NBER-EASE forthcoming; "Characteristic Market Behaviors Caused by Intervention in Foreign Exchange Market," (with Takayuki Mizuno, Yukiko Saito, Hideki Takayasu) Nikkei Econophysics III Proceedings, forthcoming; "Are firm growth rates random? Evidence from Japanese small firms," (with Yukiko Saito) Nikkei Econophysics III Proceedings, forthcoming; "Tax policy and consumer spending: Evidence from Japanese Fiscal Experiments," (with Katsunori Watanabe and Takayuki Watanabe) Journal of International Economics 53, 2001; "Output-inflation tradeoff at near-zero inflation rates," (with Kenji Nishizaki) Journal of the Japanese and International Economies 14, 2000.

WATANABE Wako

Associate Professor, Graduate School of Economics and Management, Tohoku University

Before appointment to his current position in 2005, Professor Watanabe worked at Osaka University and the Ministry of Internal Affairs and Communications. His primary research area is micro-level empirical analysis with an emphasis on drawing macroeconomic implications. His current research topics include (1) effects of prudential regulations on the banking behavior; (2) relationship lending; and (3) household saving behavior. Professor Watanabe holds a Ph.D. and an M.A. in Economics from Princeton University, and a B.A. in Economics from Keio University. His major works include "Prudential Regulation and the 'Credit Crunch': Evidence from Japan," which will appear in the Journal of Money, Credit and Banking.

XU Peng

Faculty Fellow, RIETI / Professor, Faculty of Economics, Hosei University

For most of his career, Professor Xu has taught in Hosei University's Department of Economics. Since 1999, he has also spent time at the University of North Carolina, Chapel Hill and Ohio State University, both as Visiting Researcher and Professor. He has served as Faculty Fellow at RIETI since 2003. His areas of expertise include Corporate Finance, Corporate Governance, and Law and Economics. Professor Xu holds a Ph.D. in Economics from The University of Tokyo.

YAMORI Nobuyoshi

Professor, Graduate School of Economics, Nagoya University

Professor Yamori graduated from Shiga University and obtained his M.A. from Kobe University and his Ph.D. from Nagoya University. He is currently Professor at Nagoya University. He has been appointed as a Visiting Scholar at several institutions, such as Columbia University, Long Island University and the Federal Reserve Bank of San Francisco. He has published many papers in international banking and financial journals, such as the Journal of Banking and Finance, Journal of Financial Research, and Journal of Risk and Insurance. He also serves as an editor of several professional journals, such as the International Journal of Business.

YASUDA Takehiko

Faculty Fellow, RIETI / Professor, Faculty of Economics, Toyo University

Prior to his current position, Mr. Yasuda was Director, Research Office, Small and Medium Enterprise Agency. He has held many teaching and research positions, among them, Professor at Shinshu University and Visiting Fellow at APART, Stanford University. He received his B.A. in Economics from The University of Tokyo. His area of expertise is in the Analysis of Decisive Factors for Firm-Creation and Results in the SME sector.

YOSHITOMI Masaru

President and CRO, RIETI

Prior to his current post, Dr. Yoshitomi was Dean of the Asian Development Bank (ADB) Institute, Tokyo (1999-2003). He was also Visiting Executive Professor at the Wharton School of the University of Pennsylvania (1993-'98). Dr. Yoshitomi served as Director-General, Coordination Bureau at the Economic Planning Agency (EPA) (1991-'92); Director-General, Economic Research Institute, EPA (1987-'91); and Director, Economics and Statistics Department, OECD, Paris (1984-'87). He also served as an economist at the IMF (Washington, D.C.) (1970-'74). He holds a Ph.D. in Economics from The University of Tokyo.