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From developmental to regulatory state: Japan's new financial regulatory system

By Andrew Walter

Abstract

Recent financial reforms in Japan and elsewhere in Asia represent, for various authors, a fundamental shift in financial governance and in state-business relations in the region. The old 'developmental' state in East Asia has supposedly made way for a neoliberal 'regulatory' state, with its emphases on agency independence and the non-discretionary enforcement of rules. I show in this paper that this interpretation exaggerates the extent of the transformation in the important case of Japan. Although the outward institutional forms of economic governance in Japan, as with many Asian developing countries, has changed dramatically since the mid-1990s, discretion still remains at the core of economic and financial policy. In the area of Japanese banking regulation and supervision, I show how this highly discretionary application and enforcement has been consistent with domestic political pressures. The result is a substantial divergence between superficial convergence upon international regulatory standards and underlying behaviour. I also give reasons why globalization does not mean that this hybrid regulatory model is unsustainable

Topics: HC Economic History and Conditions, JZ International relations
Publisher: Taylor & Francis
Year: 2006
DOI identifier: 10.1080/09512740600984507
OAI identifier: oai:eprints.lse.ac.uk:5926
Provided by: LSE Research Online
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