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Investigating Japanese Banking Sector Competition - A panel data approach
Finance & Accounting
Pages 14 (3514 words)
Investigating Japanese Banking Sector Competition – A Panel Data approach Abstract This paper investigates the degree of competitiveness in the Japanese Banking Sector. Using a longitudinal data set containing information on 1018 banks covering time span of 1988-2012 and applying a modified version of the Panzar-Rosse methodology suitable for the present purpose, several interesting insights are derived.
Introduction Albeit the Japanese economy has been long hailed as the model of success in Asia, the transition towards a market oriented economy has not been smooth. Despite of the ravages left in the aftermath of the 2nd world war, the 1960’s and 1970’s saw Japan attain enormously high rates of economic growth (Johnson, 1982). The regulated financial sector working in tandem with the government and business corporations led to a stable and steady integrated economic system which allowed the economy to flourish. The Japanese banking system had a critical role to play in this phase. Not only did the banks act as corporate governing bodies, they also played roles or rescuers when enterprises where in financial difficulties. By providing loans to enterprises that were investing in sectors with strong growth potential these banks shared the risks in similar vein to venture capitalists (Wade, 1999). But in the decades of the 1970’s and 1980’s the fast growing economy compelled by the global environment of market integration had to modify its structure and attempt to adjust to the new environment. ...
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