This article was written while Yamori was visiting the Center for Pacific Basin Studies of the Federal Reserve Bank of San Francisco. Helpful comments were received from William T. Moore, Narunto Nishigaki, and two anonymous referees. Yoshihiro Asai and Hiroshi Kokame provided excellent research assistance. The views expressed in this article are those of the authors and not necessarily those of the Federal Reserve Bank of San Francisco or the Board of Governors of the Federal Reserve System.
The Evolution Of Bank Resolution Policies In Japan: Evidence From Market Equity Values
Article first published online: 9 FEB 2004
Journal of Financial Research
Volume 27, Issue 1, pages 115–132, March 2004
How to Cite
Spiegel, M. M. and Yamori, N. (2004), The Evolution Of Bank Resolution Policies In Japan: Evidence From Market Equity Values. Journal of Financial Research, 27: 115–132. doi: 10.1111/j.1475-6803.2004.00080.x
- Issue published online: 9 FEB 2004
- Article first published online: 9 FEB 2004
We examine the evidence in equity markets concerning bank regulatory policies in Japan from 1995 to 1999. Our results support the presence of information-based contagion in Japanese equity markets. When the failure of a bank of certain regulatory status was announced, it adversely affected excess returns on banks with equal or lower levels of regulatory protection. Market participants therefore initially behaved as if only second regional and smaller banks would be allowed to fail. As the situation deteriorated, however, banks that traditionally enjoyed greater regulatory protection were also perceived to lose their too-big-to-fail status.