Japan's Financial Crisis: Institutional Rigidity and Reluctant Change

Extract

Japan's Financial Crisis: Institutional Rigidity and Reluctant Change. By Jennifer A. Amyx. Princeton and Oxford: Princeton University Press, 2004. 408p. $39.50.

Recently, the puzzle of the unexpected and never-ending Japanese financial crisis has eluded Japan specialists and comparative political economists alike. How could the same institutions generate an overperforming economy for more than three decades and a decade-long crisis? How could a system once praised for its ability to handle economic shocks such as the two oil shocks and a massive reevaluation of the Yen suddenly stall and prove unable to adapt to changing conditions? How could the greatest creditor and capital exporter of the planet have such weak financial regulations? Scholars have disagreed on both the diagnostics and the causes of the crisis. While some have focused on mistakes in fiscal or monetary policy, others have emphasized a systemic breakdown. While some have emphasized domestic political factors (be they interest groups, party politics, electoral system, or bureaucratic dominance), others have focused on external factors.