Chapter 8: Crisis politics for banking regulation reform
This chapter focuses on the financial core of the Japanese-style coordinated market economy (CME) – the main bank system and the related public policy domain of banking regulation. It has undergone adaptation to the neoliberal international financial order that emerged in the late 1980s. The order is based in part on the Basel Capital Adequacy Accord that emphasizes solid capital foundations for commercial banks and a rule-based supervisory regime. The accord was expected to improve the Japanese regulatory regime in pursuit of efficiency and trustworthiness of the Japanese banking system. Initially, it was widely anticipated that, using Basel as a learning step, Japan could adjust its non-liberal banking system to the neoliberal financial order through regulatory adaptation (Himino, 2005). The adjustment was needed for banks to be able to compete squarely with their US and European counterparts, without upsetting the existing financial core of the Japanese-style CME. In addition, the banks’ new practice would generate the complementary effect of improving their client firms’ management through the main bank system and the related oversight function.
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