The Political Economy of the Japanese Financial Big Bang: Institutional Change in Finance and Public Policy Making

Author(s)/Editor(s) Written by TOYA Tetsuro
Translation supervised by AOKI Masahiko
Translated by TOYA Riina
ISBN 4-492-39399-4
Publication Date January 2003

Table of Contents

Commentators on Japan politics often claim the country's politics never change. This book argues, however, that Japan's financial politics of the mid 1990s, culminating in the "Big Bang" financial deregulations of 1996, have significantly altered the political landscape. The "convoy system," whereby the Ministry of Finance (MOF) sheltered and segmented the domestic financial industry, and the policy-making mechanism of "bureaupluralism" centered on the bureaucracy and the Liberal Democratic Party have largely broken down due to poor economic performance, scandals and the rise of a viable political opposition.

The book has three goals. First, it attempts to paint a realistic picture of post-1995 financial politics in Japan. The author argues the Big Bang is best understood as the outcome of strategic interaction between state actors (i.e., the MOF and the LDP) seeking organizational survival. Second, it seeks to provide a causal mechanism for developments in financial politics by constructing a framework of institutional change and a typology of reform in Japan's financial sector. Third, it offers theoretical insights beyond Japan's financial sector, arguing that entrenched actors may not be as secure as they seem; that bureaucrats do not always maximize their organizational power; and that the public has more policy influence than commonly thought because politicians, bureaucrats and interest groups actively seek public support to enhance their positions.

Chapter 1: Introduction

Part I Preparing the Analysis
Chapter 2: Existing Approaches, Methodology, and Alternative Explanations
Chapter 3: Actors, Preferences, Strategies, and Institutions in Financial Politics: Our Theoretical Framework
Chapter 4: The Economic Realties of the Big Bang

Part II Analysis of Financial Politics
Chapter 5: The Emergence of the Big Bang Initiative: A Political Analysis
Chapter 6: The Financial Industries' Influence on the Financial Reforms
Chapter 7: New Developments in Bureaupluralism in Financial Politics

Part III Making Sense of the Changes
Chapter 8: Institutional Change in the Japanese Political Economy: The Breakdown of the Financial Convoy and the Decay of Bureaupluralism
Chapter 9: Conclusions

* This publication is in Japanese. An English translation is not available.