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WELCOME TO OUR PRESENTATION. Presented by 1.Tahniyat Sultana Prova 16-017 2.Tanvir Ahmed16-009 3.Morium Akhter 16-002 4.Sanjida Islam Khan16-018 5.Md.Farhadul Islam16-066. TOPIC :. B ank Structure And Regulation In Japan. Background. - PowerPoint PPT PresentationTRANSCRIPT
Presented by
1.Tahniyat Sultana Prova 16-017 2.Tanvir Ahmed 16-009
3.Morium Akhter 16-0024.Sanjida Islam Khan 16-0185.Md.Farhadul Islam 16-066
TOPIC :
Bank Structure And Regulation In Japan
BackgroundBackground
• In the post-war period, Japan faced a severe shortage of capital and weak financial infrastructure.
• World-war II virtually wiped out the household sector’s financial assets.
• The priority of the US occupying force and the new Japanese government was to increase assets, which in turn could finance recovery of the real economy.
• In the post-war period, Japan faced a severe shortage of capital and weak financial infrastructure.
• World-war II virtually wiped out the household sector’s financial assets.
• The priority of the US occupying force and the new Japanese government was to increase assets, which in turn could finance recovery of the real economy.
Keiretsu:
A group of companies with cross-shareholdings and shared directorships which will normally include a bank , trust company, insurance firm and major industrial concern such as steel, cars, property and construction.
Under the keiretsu system: Domestic,foreign and short and long
term financial transaction were kept separate
Interest rates regulated Financial firms organised along
functional lines.
Ministry of Finance ( MoF) backed by the Bank of Japan Was the key regulator Used regulatory guidance to operate the financial system three MoF bureaux: Banking ,Securities and International
Finance
Responsibilities:
Finanacial institution supervision: Examination of financial firms Control of interest rates and products offered by firms Supervision of the deposit protection scheme Setting the rules on activities to be undertaken by financial
firms.
Bank of Japan
• was responsible for the implentation of monetary policy.
• MoF officials exercised strong influence through its membership on the Bank’s policy board .
• The Bank and MoF conducted on site inspectiuons of banks in alternatives.
• The Bank of Japan also acted as banker for aommercial banks and govermnent, regulated the interbank market and was consulted about regulatory issues, though the MoF took all final decision.
• was responsible for the implentation of monetary policy.
• MoF officials exercised strong influence through its membership on the Bank’s policy board .
• The Bank and MoF conducted on site inspectiuons of banks in alternatives.
• The Bank of Japan also acted as banker for aommercial banks and govermnent, regulated the interbank market and was consulted about regulatory issues, though the MoF took all final decision.
• Banks for providing low interest loans to large industrial firms,were protected from foreign competitors and highly segmented markets limited domestic competitions.
• Until 1995 there was an implicit guarantee that virtually any financial firm getting into trouble would be protected – a 100% safety net.
• MoF officials were often given jobs by banks when they retired-evidence of the cosy relationship for MoF and regulated bankers.
• Banks for providing low interest loans to large industrial firms,were protected from foreign competitors and highly segmented markets limited domestic competitions.
• Until 1995 there was an implicit guarantee that virtually any financial firm getting into trouble would be protected – a 100% safety net.
• MoF officials were often given jobs by banks when they retired-evidence of the cosy relationship for MoF and regulated bankers.
Result of functional segmentation and restrictionResult of functional segmentation and restriction
excessive dependence on banking sector
60% of domestic corporates finance consisted of loans Capital markets were underdeveloped
Low participation of foreign financial firms in Japanese markets
Made Token Gesture to avoide criticism
excessive dependence on banking sector
60% of domestic corporates finance consisted of loans Capital markets were underdeveloped
Low participation of foreign financial firms in Japanese markets
Made Token Gesture to avoide criticism
Japan’s Big BangJapan’s Big Bang
Reasons behind set-up Big BangReasons behind set-up Big Bang
Objectives of the programObjectives of the program
The package of reforms include The package of reforms include three principlesthree principles
Reformation was Reformation was established-established-
The Bank of Japan Act, The Bank of Japan Act, 1998 indicates-1998 indicates-
Activities of Finance Activities of Finance Minister-Minister-
Financial Service AgencyFinancial Service Agency
FSA- Formulates Policy Regulates the
financial sector Establishing
Creditability
Deposit Insurance commission of Japan (DICJ)
Deposit Insurance commission of Japan (DICJ)
• DICJ is an operating agency to achieve the objective to protect depositors, among others and concerning the resolution of failures of financial institutions.
• The DICJ consists of 7 departments • 35 divisions • 4 offices,• with a total of 402 staff
• DICJ is an operating agency to achieve the objective to protect depositors, among others and concerning the resolution of failures of financial institutions.
• The DICJ consists of 7 departments • 35 divisions • 4 offices,• with a total of 402 staff
Deposit Insurance Commission of JapanDeposit Insurance Commission of Japan
Deposit Insurance Commission
established in 1971
(DICJ) funding from the government
main body that operates are the Bank of Japan, andprivate financial institutions
The original capital of 450 million
The government subsequently subscribed additionalcapital of 5 billion in July 1996 to administer work
The current share of the Japanese government stands at around 95% of total capital.
Deposit Protection SchemeDeposit Protection Scheme
• There are two methods of protecting deposits when a financial institution fails:
1 . A method of transferring business to other sound financial institution and concurrently providing financial assistance
2 . A method where the DICJ pays insurance proceeds directly to depositors
• There are two methods of protecting deposits when a financial institution fails:
1 . A method of transferring business to other sound financial institution and concurrently providing financial assistance
2 . A method where the DICJ pays insurance proceeds directly to depositors
Major activities of DICJMajor activities of DICJ
Collection of insurance premiumFinancial assistancePurchase of deposit & other claimsResponse to financial crisisThe operation of bridge bankSubscription for shares of financial institutionInvestigation & accusation of pursuit of
managerial liability
Collection of insurance premiumFinancial assistancePurchase of deposit & other claimsResponse to financial crisisThe operation of bridge bankSubscription for shares of financial institutionInvestigation & accusation of pursuit of
managerial liability
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