| ID | 131885 |
| Title Proper | Politics of bank bailout in Japan |
| Other Title Information | a cognitive capture and leadership view |
| Language | ENG |
| Author | Kang, Myung-koo |
| Publication | 2014. |
| Summary / Abstract (Note) | This article explores why the Japanese government did not decisively intervene on behalf of bank bailouts at the early stage of the banking crisis of 1997-98 and investigates the institutional and political context behind the use of fiscal money for bank bailouts in 1997-98, 1998-99, and 2001-05. In contrast with prevailing views, which emphasize the conflicts of interest or differences in policy preferences between politicians and bureaucrats and their captured nature either by bankers' special interests or political/bureaucratic interests, this article argues that Japanese policymakers shared a congruent policy preference - that is, minimizing the disruptions in the existing institutional arrangement in government-bank-firm relations and this congruence in policy preference (or 'cognitive capture') compelled the government to take a creditor-centered approach to the banking problem - i.e., letting banks resolve their own problems. It also argues that a strong political leadership that can break with the 'cognitive capture' and sustain government's resolute commitment to solving the nonperforming loan problem is an essential factor for successful bank restructuring. |
| `In' analytical Note | Pacific Review Vol. 27, No.2; May 2014: p.193-215 |
| Journal Source | Pacific Review Vol. 27, No.2; May 2014: p.193-215 |
| Key Words | Monetary Policy ; Banking Policy - Japan ; Politics ; Bank Bailout ; Cognitive Capture ; Leadership View ; Japan ; Economic Policies ; Banking Crisis ; Political Context ; Financial Crisis ; Economic Bureaucracy ; Financial Conflicts ; Political Leadership ; Fiscal Money |