EIJS Working Paper Series,
Stockholm School of Economics, The European Institute of Japanese Studies

Abstract: Amakudari, or the reemployment of the officials retired from the government into senior management positions in private companies, is one of the informal institutions most frequently mentioned in the literature of Japanese political economy. However, few studies have examined it systematically. Focusing on the reemployment from Ministry of Finance and Bank of Japan into regional banks, this paper discusses the mechanism of amakudari appointments and its change over time. Four different perspectives (human resource, communication, monitoring and compensation) are presented, and their validity is tested by an empirical analysis with the panel data of 96 regional banks from 1991 to 2000. The result shows that the appointment of a retiree from a ministry at the retirement of a predecessor from the same ministry (chain appointment) is no longer the case. On the other hand, it is also found that amakudari is more likely to occur at more profitable/safer banks than others, which supports the traditional argument that amakudari is used as compensation for retired bureaucrats.

Keywords: Japan; institutional change; amakudari; banks; political economy; retirement; bureaucrats; Ministry of Finance; Bank of Japan.

JEL-codes: H83; J26; J45

73 pages, September 1, 2004

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