Japan Post Bank

Current Issues and Prospects

verfasst von: Prof. Akira Uno

Verlag: Springer Singapore

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

This book provides a comprehensive view on how regional financial institutions should be operated in order to restore Japan’s fiscal health. It points out that, even though the Japan Post Bank has been partially privatized, the old mandatory deposit system still virtually exists between the bank and the government. This makes the bank’s asset portfolio heavily weighted toward Japanese government bonds and creates a bottleneck to restoring fiscal health. The book also demonstrates how this system and the low interest rate policy keep the bank’s return on assets (ROA) low and expose the bank to an interest rate risk and credit risk.

While shedding light on the true nature of these problems, this work looks into the best ways regional financial institutions can be operated for the sake of regional economic revitalization. The process would involve integrating the three privatized public financial institutions (i.e., the Japan Post Bank, the Shoko Chukin Bank, and the Development Bank of Japan) and splitting their operations into different businesses and regional companies as well as reorganizing more than 100 regional banks.

The author analyzes total assets and ROA of different types of financial institutions (public and private financial services) in Japan to obtain an overall view. Then, using ROA as an assessment indicator, he looks into ways to optimize their portfolios to make the most of individual financial assets, especially deposits, from a welfare economics point of view and formulates a theory for optimization. Financial institutions can optimize their ROA by using individual deposits and savings for total optimization to maximize their return on investment. If the share of total assets by type of financial institution is optimized through mergers or vertical integration between different types of financial institutions, and if ROA is optimized overall as a result, the structure of financial institutions by type in Japan can be optimized.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Paving the Way to the Privatization of Public Financial Services

Abstract

Japan’s public economy, i.e., the system in which taxpayers receive public services in return for their tax money, was the brainchild of Maejima Hisoka (1835–1919), also known as the father of the Japanese postal service.

Akira Uno

Chapter 2. Privatization of Public Financial Services and Financial Reforms

Abstract

In this book, public financial services refer to the Japan Post Bank, which is affiliated with the Japan Post Group, in which the government has an equity stake, as well as policy-based financial institutions and special public institutions such as the Development Bank of Japan (DBJ). These are two different types of financial institution. Japan Post Bank, which raises capital, is where money flows in, whereas policy-based financial institutions and special public institutions, which use that capital for lending, are where money flows out, and they offer two different types of accounts, i.e., one is for savings and the other loans (Fig. 2.1). Specifically, as at the end of fiscal year 2016 the government held a stake in 23 special corporations worth 24.4 trillion yen. The government owns 56.9% of all shares in Japan Post Holdings Co., worth 5.06 trillion yen (after its share sale in September 2017). It also owns a 100% stake in the DBJ worth 2939.3 billion yen. In addition, it owns a 46.5% stake in Shoko Chukin Bank worth 179.8 billion yen and a 100% stake in Japan Finance Corporation worth 5130.8 billion yen, as well as a 100% stake in the Japan Bank for International Cooperation worth 2507.6 billion yen. This government-guaranteed financial system, where the government owns stock in Japan Post Holdings Co. (holding an 89% stake in Japan Post Bank Co.), which serves a fund-raising function, as well as policy-based financial institutions, which serve a funds management function, is referred to as the public financial system. Private financial services, on the other hand, are financial institutions where the money comes in and goes out the same door. The money that is deposited with them is lent, for example, depending on the risks involved.

Akira Uno

Chapter 3. Progress After the Privatization of Public Financial Services and Trends by Type of Financial Institution: Listing of Japan Post Bank and Reorganization of Regional Banks

Abstract

In October 2007, five companies affiliated with the Japan Post Group became stock companies wholly owned by the government, i.e., privately operated but government owned companies. In October of the following year, policy-based financial institutions (Development Bank of Japan, Shoko Chukin Bank, and Japan Finance Corporation) also became privately operated but government-owned stock companies.

Akira Uno

Chapter 4. Theory and Empirical Analysis for the Restructuring of the Three Privatized Public Financial Institutions and Regional Banks

Abstract

In 2002, following the FILP reform, the government claimed that Japan’s policy-based finance system was a behemoth when stacked up against the systems of other countries and that its burgeoning scale had caused the financial and capital markets’ resource allocation mechanism to break down. Stressing that enhancing the efficiency of the financial and capital markets was a top priority, the Japanese government insisted that a drastic reform of policy-based finance was crucial in order to unshackle the private sector. The government believed that public funds should be used by private financial services to promote its growth strategy.

Akira Uno

Chapter 5. Institutional Designs for the Reorganization of the Three Privatized Banks and Regional Banks

Abstract

Centralized and bloated, public financial organizations have become too big to efficiently deploy their human and physical resources in an effort to get people to deposit their savings in a network of small branches that stretches across Japan. Public financial services lack the know-how to deal with risks and bad loans because they are protected by a government guarantee or automatic government guarantee when investing funds. That’s why they fail to operate as financial institutions in the true sense.

Akira Uno

Backmatter

Titel: Japan Post Bank
verfasst von: Prof. Akira Uno
Verlag: Springer Singapore
Electronic ISBN: 978-981-15-1408-1
Print ISBN: 978-981-15-1407-4
DOI: https://doi.org/10.1007/978-981-15-1408-1