Supplement | HBS Case Collection | November 2009 (Revised June 2012)

Crisis and Reform in Japan's Banking System (B)

by Thierry Porte, Rawi E. Abdelal, Laura Alfaro and Jonathan Schlefer

Abstract

In 1997, amidst Japan's ongoing financial problems, Prime Minister Ryutaro Hashimoto sought to restructure the financial sector to make it more transparent and globally competitive. He hoped that this effort, dubbed the "Big Bang" after the British financial restructuring of a decade earlier, would prove as successful. But the financial problems, which seemed to have abated, looked as if they might be worsening. Thus, Hashimoto had to weigh priorities. Should he focus on long-term restructuring, immediate financial rescue, or both? Might an over-emphasis on long-term restructuring increase the chances that major banks could collapse? And what were the best economic and political strategies in these arenas? As a major developed economy, Japan offers an analog to the problems that faced the United States in its 2008-09 financial crisis.

Keywords: History; Adaptation; Policy; Globalized Markets and Industries; Financial Crisis; Business and Government Relations; Macroeconomics; Restructuring; Global Strategy; Banks and Banking; Banking Industry; Japan;

Citation:

Porte, Thierry, Rawi E. Abdelal, Laura Alfaro, and Jonathan Schlefer. "Crisis and Reform in Japan's Banking System (B)." Harvard Business School Supplement 710-037, November 2009. (Revised June 2012.)