The Political Economy of the Japanese Financial Big Bang: Institutional Change in Finance and Public Policymaking »

The late Tetsuro Toya obtained his PhD from Stanford University in 2000. He completed his undergraduate studies at Tokyo University. He has held positions in the Secretarial Division, Minister's Secretariat, Ministry of Finance and was a Visiting Fellow at the Research Institute of Economy, Trade and Industry (RIETI).

This book emphasizes change over continuity in Japanese policymaking. It argues that Japan's Big Bang financial reforms emerged out of a policymaking process that deviated radically from past patterns. Performance failures, scandals and fluidity in party politics led the Ministry of Finance to promote reforms that otherwise would have been opposed.

List of Figures     xvi
List of Tables     xvii
List of Abbreviations     xviii
Did Japanese Politics Change in the 1990s?     1
Change or Continuity?     1
Research Puzzles     7
Methodological Approach and Theoretical Framework     10
Argument in Brief     13
Structure of the Book     18
Analytical Framework
A Rational Actor Approach     23
Three Contentious Issues in Japanese Politics     23
Works on Japanese Financial Politics and the Big Bang     33
The Study's Methodological Approach and Research Design     36
Possible Alternative Explanations     42
How do Systems Change?: Actors, Preferences, Strategies, and Institutions in Financial Politics     46
Introduction of conceptual tools for institutional analysis     46
A Theoretical Framework for Institutional Change     51
The Dynamics of Organizational Survival     58
State Actors (1)-Political Parties     60
State Actors (2)-Bureaucratic Agencies     63
Societal Actors (1)-Firms and Interest Groups     68
Societal Actors (2)-The Public     71
Institutions in Japanese Financial Politics (1)-Bureaupluralism in PublicPolicymaking     75
Institutions in Japanese Financial Politics (2)-The Financial "Convoy"     87
Scenarios of Financial Reform     95
Expected Economic Implications of the Big Bang     102
Background to the Big Bang Plan     102
Basic Concepts of the Financial Big Bang Plan: Principles, Pace, and Sequence     118
Concrete Policies Included in the Financial Big Bang     121
Expected Economic Consequences of the Big Bang     128
"Winners" and "Losers" of the Big Bang     132
Conclusion     147
Analysis of Financial Politics
A Political Analysis of the Emergence of the Big Bang Initiative     153
Balancing the Interests of Support Constituents and the General Public     154
Who Brought about the Big Bang?     156
Developments within MOF related to the "Big Bang"     167
Developments within the LDP related to the Big Bang     171
Summary: Who Brought about the Big Bang?     176
Organizational Level Evaluation     177
Integrating the Suborganizational and Organizational Levels of Analysis     182
Assessment against Competing Explanations     183
Conclusion     187
The Financial Industry and the Big Bang     189
Two political paths to economic reform     190
Developments following the Prime Minister's Initiative     191
Summarizing the Narrative     202
Three Previous Cases of Financial Reform     206
Comparing the Financial Big Bang to Past Financial Reforms     212
Why was the Financial Industry Unable to Stop the Big Bang?     214
Conclusion: The Big Bang as a Victory by the "Political Winners"     219
New Developments in Bureaupluralism: Comparing and Contrasting the Big Bang to the 1998 "Financial Diet"     220
New Developments in Bureaupluralism emerging out of the Financial Big Bang     221
Comparing and Contrasting the Big Bang with the Fall 1998 "Financial Diet"     224
New Patterns in Financial Policymaking     233
Public Support as a Determinant in Financial Politics     234
Comparison with Alternative Explanations     242
Conclusion     247
The Meaning of Change
Two Institutional Changes     251
Review: Conceptualizing Institutions and Characteristics of Two Key institutions in Japanese Finance     252
What Drives "Institutional Change"? Reexamining the Context of Japanese Financial Politics     255
Relating the Big Bang to Broader Changes in Finance     264
Institutional Change in Finance: Collapse of the Financial Convoy     274
Institutional Change in Public Policymaking: The Decay of Bureaupluralism     276
Conclusion     283
Conclusion     286
Insights into Regulatory Reform in Other Contexts     290
Implications for Economic Reforms in Other Policy Areas     291
Policy Implications     304
Further Issues     309
Appendix     311
References     312
Index     323