EIJS Working Papers Series
No 136:
Effect of Amakudari on Bank Performance in the Post-Bubble Period
Kenji Suzuki ()
Abstract: One of the curiosities about the Japanese banking sector
for Westerners is the close connection between banks and the financial
authority, namely Ministry of Finance (MoF). One of the important sources
of this connection is the practice called amakudari. Amakudari symbolizes
the practice under which retired government officials "descend from their
heaven" to be employed in the private sector. The practice has long been
carried out in the banking sector, as well as other industrial sectors in
Japan. Previous studies, particularily Horiuchi and Shimizu (2001),
examined the effect of the close connection between banks and the financial
authority in Japan, so-called amakudari. However, their observation did not
cover the "post-bubble" period in which one may expect some changes. The
present study re-examines this amakudari practice adopting the latest data,
redesigning and developing the previous model. It found that the overall
effect of amakudari was reduced through the 1990's, but this is just
because of the reduction of amakudari appointments. In fact, the gap
between the banks with amakudari and the others became wider in recent
years.
Keywords: amakudari; financial supervision; Japan; incentives of regulator; post-bubble; (follow links to similar papers)
JEL-Codes: G21; G28; (follow links to similar papers)
17 pages, November 1, 2001
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