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The Ministry of Finance and the disclosure of bad debts in Japan: A model

Eto, Takaharu

Description

The reluctance of The Ministry of Finance (MOF) to disclose non-performing loans in the banking industry caused a delay in its rescue operations and, as a result, exacerbated the financial crisis in Japan in the 1990s. This paper attempts to answer the question of why the MOF balked at disclosing the bad loan problem. We focus on the reputation concern of the MOF, and develop a model which explores factors that prevented the MOF from truth-telling. The model predicts that the reputation effect...[Show more]

dc.contributor.authorEto, Takaharu
dc.date.accessioned2003-06-23
dc.date.accessioned2004-05-19T10:31:20Z
dc.date.accessioned2011-01-05T08:37:17Z
dc.date.available2004-05-19T10:31:20Z
dc.date.available2011-01-05T08:37:17Z
dc.date.created2002
dc.identifier.urihttp://hdl.handle.net/1885/40592
dc.identifier.urihttp://digitalcollections.anu.edu.au/handle/1885/40592
dc.description.abstractThe reluctance of The Ministry of Finance (MOF) to disclose non-performing loans in the banking industry caused a delay in its rescue operations and, as a result, exacerbated the financial crisis in Japan in the 1990s. This paper attempts to answer the question of why the MOF balked at disclosing the bad loan problem. We focus on the reputation concern of the MOF, and develop a model which explores factors that prevented the MOF from truth-telling. The model predicts that the reputation effect might be high in booms and low in recessions. Indeed, the MOF was beginning to announce the amount of bad loans after the economy had entered a recession. The model also enables us to assess the recent development of the Japanese financial system from the perspective of reputation effects.
dc.format.extent446083 bytes
dc.format.extent350 bytes
dc.format.mimetypeapplication/pdf
dc.format.mimetypeapplication/octet-stream
dc.language.isoen_AU
dc.subjectJapan
dc.subjectMinistry of Finance
dc.subjectbad debts
dc.subjectdisclosure
dc.subjectbad loans
dc.subjectbad loan disclosure
dc.subjectregulator
dc.titleThe Ministry of Finance and the disclosure of bad debts in Japan: A model
dc.typeWorking/Technical Paper
local.description.refereedno
local.identifier.citationmonthmay
local.identifier.citationyear2002
local.identifier.eprintid1473
local.rights.ispublishedno
dc.date.issued2002
local.contributor.affiliationSchool of Economics
local.contributor.affiliationANU
local.citationWorking Papers in Economics and Econometrics no.420
CollectionsANU Research Publications

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