Assessments of the program for financial revival of the Japanese banks

Tatsuyoshi Miyakoshi, Yoshihiko Tsukuda

Research output: Contribution to journalArticle

2 Citations (Scopus)

Abstract

This article assesses the program for Financial Revival (PFR) of the Japanese banks. To achieve the programme's goal of maximizing banks' profits, the government can inject capital and reduce bad loans of banks subject to the government budget constraint. We conclude that the government can achieve the programme's goal only in areas where the Bank for International Settlements (BIS) capital ratio regulations are binding. The government should restrain to reduce bad loans when the unit price of doing so increases and cannot maximize depositors' or borrowers' surpluses together with banks' profits. The Basel II Framework enhances banks' profits under the programme. The empirical evidence indicates that the necessary condition for achieving the programme's goal is satisfied.

Original languageEnglish
Pages (from-to)901-912
Number of pages12
JournalApplied Financial Economics
Volume17
Issue number11
DOIs
Publication statusPublished - 2007 Jul

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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