Keyword: concentration

Gerstenberger, Juliane; Schnabl, Gunther

Abstract

Gunther Schnabl and Juliane Gerstenberger analyse the impact of the Bank of Japan’s low-interest rate policy on the banking sector in the wake of the 1998 Japanese financial crisis. They provide evidence that the Japanese monetary policy has contributed to declining efficiency in the banking sector, despite – or possibly because of – the increasing concentration within this sector.

Keywords: Banking Sector, City Banks, concentration, Crisis Management, Japan, Monetary policy, regional banks, Shinkin Banks.

JEL Codes: E52, E58, E63, F42.

Erschienen in

Credit and Capital Markets – Kredit und Kapital, Bd. 54 (2021), Heft 4: S. 533–562.

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Gunther Schnabl; Taiki Murai

Abstract

The bursting of the Japanese bubble economy in the early 1990s put the stage for a lasting lowzero-, and negative-interest rate environment, which fundamentally changed the business environment for the Japanese commercial banks. On the income side, with interest margins becoming increasingly depressed, net interest revenues declined, which forced the banks to expand revenues from fees and commissions. The banks had to cut costs by reducing the number of employees, closing branches and merging into larger banks. The gradual concentration process has most recently cumulated in the relaxation of the monopoly law. With the capital allocation function of banks being undermined, the Japanese economy has become zombified, suffering from anemic growth.

Keywords: Bank of Japan, banks, concentration, financial repression, interest margin, Japan, Monetary policy, regional banks.

JEL Codes: E50, E52, G21.

Erschienen in

Working Paper, No. 169.

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