Financial Crises and Issues of Public Fund Injection : A Lesson in Japan

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  • キンユウ キキ ト コウテキ シキン トウニュウ モンダイ
  • 金融危機と公的資金投入問題

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Abstract

The global financial crisis enforced major governments to decide public fund injection into financial institutions. The purpose was to rescue the financial system and sustain their economies. Japan had experienced the same crisis during a decade around 2000. The financial system was on the verge of collapse due to the heavy accumulation of non-performing loans mainly in major banks. The government hesitated to inject the public fund into them. Later it launched the scheme of public fund but it was too late. As a result Japanese economy dropped into a long term recession and deflation. It took almost 8 years to stabilize the financial system. In the process the Deposit Insurance Corporation of Japan (DICJ) played an important part as an executor of public fund. The analysis of DICJ' work is useful for considering issues of public fund injection. The US and European governments have learned a lot from Japanese lesson and they have quickly moved to inject public fund into financial institutions. Following them Japanese government has been preparing a comprehensive package of supporting the economy. It includes public fund injection into even private big companies as equity through Development Bank of Japan as well as private banks. The government will compensate them for a loss if it happens in the future. However Japanese lesson has also taught us that a particular portion of public fund is never paid back and it becomes a loss of the nation. The criterion of public fund injection should be discussed more rigidly for transparency.

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