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The Impact of the Bank of Japan’s Low-Interest Rate Policy on the Japanese Banking Sector

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Gerstenberger, J., Schnabl, G. The Impact of the Bank of Japan’s Low-Interest Rate Policy on the Japanese Banking Sector. Credit and Capital Markets – Kredit und Kapital, 54(4), 533-562. https://doi.org/10.3790/ccm.54.4.533
Gerstenberger, Juliane and Schnabl, Gunther "The Impact of the Bank of Japan’s Low-Interest Rate Policy on the Japanese Banking Sector" Credit and Capital Markets – Kredit und Kapital 54.4, 2021, 533-562. https://doi.org/10.3790/ccm.54.4.533
Gerstenberger, Juliane/Schnabl, Gunther (2021): The Impact of the Bank of Japan’s Low-Interest Rate Policy on the Japanese Banking Sector, in: Credit and Capital Markets – Kredit und Kapital, vol. 54, iss. 4, 533-562, [online] https://doi.org/10.3790/ccm.54.4.533

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The Impact of the Bank of Japan’s Low-Interest Rate Policy on the Japanese Banking Sector

Gerstenberger, Juliane | Schnabl, Gunther

Credit and Capital Markets – Kredit und Kapital, Vol. 54 (2021), Iss. 4 : pp. 533–562

1 Citations (CrossRef)

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Juliane Gerstenberger, Seelenberger Straße 4, 60489 Frankfurt, Germany.

Prof. Dr. Gunther Schnabl, Leipzig University, Institute of Economic Policy, Grimmaische Straße 12, 04109 Leipzig.

Cited By

  1. Niedrigzinspolitik und Sparkultur in Japan: Implikationen für die Wirtschaftspolitik

    Schnabl, Gunther

    Sepp, Tim

    ORDO, Vol. 72-73 (2022), Iss. 1 P.392

    https://doi.org/10.1515/ordo-2023-2001 [Citations: 0]

References

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  102. Peek, J./Rosengren, E. S. (2005): “Unnatural selection: perverse incentives and the misallocation of credit in Japan”, The American Economic Review, Vol. 95 No. 4, pp. 1144–1166.  Google Scholar
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  106. Schnabl, G. (2015): “Monetary policy and structural decline: Lessons from Japan for the European crisis”, Asian Economic Papers, Vol. 14 No. 1, pp. 124–150.  Google Scholar
  107. Schnabl, G. (2020): Japans Banken in der Krise, Springer Gabler, Wiesbaden.  Google Scholar
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  116. Weill, L. (2004): “Measuring cost efficiency in European banking: A comparison of frontier techniques”, Journal of Productivity Analysis, Vol. 21 No. 2, pp. 133–152.  Google Scholar
  117. Wilson, P. W. (2008): “FEAR. A software package for frontier efficiency analysis with R”, Socio-Economic Planning Sciences, Vol. 42 No. 4, pp. 247–254.  Google Scholar
  118. Yoshino, N./Taghizadeh-Hesary (2016): “Decline in oil prices and the negative interest rate policy in Japan”, ADBI Working Paper, No. 600.  Google Scholar

Abstract

This paper presents an analysis of the impact of the Bank of Japan’s low-interest rate policy on the banking sector in the wake of the 1998 Japanese financial crisis. We show how the low-cost liquidity provision as a means to stabilize banks has created a growing gap between deposits and loans in the financial system and how the low-interest rate policy has compressed interest margins as the traditional source of banks’ income. Efficiency scores are compiled to estimate the effect of the Bank of Japan’s monetary policy on banks’ technical efficiency. The estimation results provide evidence that the Japanese monetary policy has contributed to declining efficiency in the banking sector, despite – or possibly because of – the increasing concentration within this sector.