Publication Date
Financial Markets Group Special Papers SP 139
Despite significant changes to the governing institutional framework and to operational procedures, a number of serious doubts remain concerning the cost-effectiveness of banking regulation and supervision in Japan. This paper duly highlights these lingering doubts focussing, in particular, on failure resolution policy and the authorities' handling of the banks' bad debt problems. One of the main conclusions of the paper is that the present government's commitment to resolve the banking industry's bad debt problem by end-2004 is extremely unlikely to be met without a major injection of additional public funds.
