StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Industry and Business - Case Study Example

Cite this document
Summary
The paper 'Industry and Business' is a great example of a Business Case Study. The Bank of Japan plays a major role in the regulation of the economy in Japan. The bank has been involved in fighting deflation in the Japanese market (Williams, 2009). The capital policy imposed by the Bank of Japan gives the impression that its financial strength might highly be affected. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER93.2% of users find it useful

Extract of sample "Industry and Business"

Running Head: INDUSTRY AND BUSINESS Industry and Business Name Institution Instructor Course Date Industry and Business Introduction The Bank of Japan plays a major role in the regulation of economy in Japan. The bank has been involved in fighting deflation in the Japanese market (Williams, 2009). The capital policy imposed by the Bank of Japan gives an impression that its financial strength might highly be affected if any change occurs in the macroeconomic environment. The Financial Services Agency is the organization charged with the responsibility of regulating banks in Japan. It also regulates insurance, securities, and other financial serve organizations. The Central Bank of Japan is known as Bank of Japan (BOJ) and plays a role of maintaining an organized financial system. The BOJ is mandated by the Banking Act Article 44 to assess financial organizations by issuing on site examinations about some policies such as emergency loans where collateral is never required. Most of the securities operating in Japan and affiliates of overseas investment banks have a current account with the BOJ. For instance in 1965, the BOJ advanced a loan to large securities company and repeat it in 1997. The Ministry of Finance was in charge of bank regulation until 1998 the FSA took over. When there was a financial crisis in 1998, the Credit Bank of Japan which is currently known as Shinsei Bank and the Aozora Bank which was initially known as Nippon Credit Bank were placed under special management (Roger, 2009). By that these two banks were considered to be too big to fail to meet operation standards and even placing then under special management was a risky exercise. After the restructuring of the Banking Act to include Deposit Insurance law, the FSA took over the regulatory power in 2000 and left the MOF to be dealing with issues to do with financial stability. Japanese experienced a financial crisis in the late 1990s and early 2000 and FSA was instrumental in overcoming the crisis. Most of the Japanese financial assets are deposited in foreign countries with United States taking an eighth while France and Germany take a third of the deposits. These depository institutions form the flow of funds to the Japan’s economy. It is the reduction in the depository finance that had contributed to the financial crisis in Japan. There was also a deflation in 1990s and 2000 that caused the value of the real estates to fall drastically. The BOJ strived to keep interest rates at a considerable level where its policy in interest rates went as low as 0.5 percent in 1995 and by 1999 had reached zero. It started going up and by 2008 it was still recorded at 0.5 Percent (Williams, 2009). FSA moved in fast to attend to the smaller financial institutions in Japan to avoid a global financial panic. Appropriate measures pertaining policy regulation had to be applied including the introduction of the ‘Prompt Corrective action. Some financial assistance was forwarded to financial institutions by the Deposit Insurance Corporation of Japan (DICJ). The grant was around 18.7 trillion yen. In planning for the resolution policies to deal with the financial crisis, Japan gained a lot of experience from United States as it applied the system used in the United States of requesting tax payers to pump in funds into the economy to enhance the stability of the financial system. The taxpayers paid more than 10 trillion yen through the deposit insurance system. The Japanese authorities also injected more than 12 trillion yen into the economy through bank deposits and provision of subordinate loans. The bank regulation in Japan is in form of emergency but this has since been changed. The blanket guarantee of deposits was eliminated in 2002 and 2005 after the denationalizing of the Ashikaga Bank which had deposits amounting to 4 trillion yen (Roger, 2009). What made Japan to survive the crisis was the fact that most of its financial institutions did not engage in prime mortgage lending in the years preceding the crisis. During the years that Japan experienced a lot of failed banks there was a lapse in communication between the FSA and the financial institutions under regulation. The financial institutions were more on the defensive while FSA was on the offensive (Murray, 2008). It is the duty of the FSA of Japan to ensure that the Tokyo market remains strong and stable. If the Tokyo market is well regulated it can offer services in Japan as well as the Asian Market. It is however not clear whether the FSA plays a regulatory role for the Tokyo stock market. It is agreed by many economists that bank regulators from al over the world have the objective of protecting the customers against exploitation by the banks, ensuring financial stability in the market, and pursuing market integrity. According to FSA the pillars for better bank regulation are effective and prompt response to financial matters affecting the bank. Transparency must also be observed while exercising the regulation measures. When the Ministry of Finance was responsible for the bank regulation in Japan, it was blamed for not being transparent and following the written rules too much while forgetting the reality on the ground. The approach that FSA uses in the regulation of the Banking sector in Japan is based on principles and supervisory approach.For FSA to administer effective bank regulation in Japan, it must be in constant dialogue with the financial institutions in the market. The players in the market should be left to make their own decisions as well if the regulation is to be effective. It therefore means that the FSA should not fall into the footsteps on the Ministry of Finance that was too offensive to the financial players without giving them a chance to express their grievances (Griffins, 2010). If need be self regulatory organizations (SROs) should be established so the financial institutions can be going through them before reaching FSA. The role of SROs differs in different countries but in Japan they form forums for the banks to discuss various issues affecting them in the market. It should therefore be understood that in this context, regulation implies better working relationship with the banks in the market. For effective regulation to be effective, the culture of self-regulation should be introduced in all the banks. The residential mortgage related crisis that were experienced in United States in 2007, illustrated how important it was to have a regulatory system that can respond promptly to the changing financial environment. A regulatory system should be backed by a strong legal system that accommodates all the players’ equally. In an event that a financial crisis occurs, it is through communication that the industry regulator will be able to involve all the players according to their financial strength in the market. When there is a crisis in the banking sector in Japan, the DICJ decides which method to be applied to settle the crisis but this has to be approved by the FSA and the Ministry of Finance. Back in 1971, DICJ was just a small organization with very few responsibilities (Murray, 2008). It was after a series of bank failures in the 1990s that saw more responsibilities given to DICJ. The Japan’s banking sector has so far been stable but the challenge remains the establishment of more stable banking regulation measures that are practical. The banking industry is Canada is very stable compared to Japan. There are five major banks in Canada with total assets of 2.3 trillion dollars (Griffins, 2010). The banks in Canada are operated in a parent model system. A parent company is an organization that has shares in other companies to an extent of influencing the daily operations of those companies. The board of directors in that company is elected by the majority shareholders. The subprime economic crisis caused more than hundred banks to shut down in the United States. This crisis did not however affect the Canadian banks but the only bank in Canada to be affected by the crisis was the Canadian Imperial Bank of Commerce. (CICBC), and lost more than two billion dollars.Banks in Canada re regulated by the federal government, while credit unions are regulated by the provincial governments. Basically the banking industry in Canada is regulated by the 1991 Canadian Act which is the fundamental law for the regulation (Murray, 2008). The three conditions given to banks that are regulated by the Canadian Banking Act include that banks are disallowed to take deposits from other subsidiary banks. The foreign Banks in Canada are give permission to accept deposits but have no permission to issue mortgages in Canada. There are a lot of restrictions that are issued to the foreign banks that operate in Canada. Conclusion In conclusion the above regulations are given by the office of the Superintendent of Financial Institutions (OSFI). This office is also mandated to issue policies on the management of risks in the banking investments. Banking regulation in any country whether Canada or Japan does not mean micro-management of the banking sector, or the dictating of the rules to be followed by such banks but it’s the protection of the consumers against exploitation by investors. The regulation policy used in Canada can however be emulated by many other countries in the world that wish to prevent economic crisis. References Griffins, M. (2010). Banking Policy in Japan. London: Oxford. Murray, A. (2008). The Banking Policy in Canada. Vancouver: Routledge. Roger, M. (2009). How to deal with financial crisis. New York: Routledge. Williams, G. (2009). Effective regulations of the banking sector: Case Study. New York: Time Books. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Industry and Business Case Study Example | Topics and Well Written Essays - 1500 words, n.d.)
Industry and Business Case Study Example | Topics and Well Written Essays - 1500 words. https://studentshare.org/business/2078145-industry-and-business
(Industry and Business Case Study Example | Topics and Well Written Essays - 1500 Words)
Industry and Business Case Study Example | Topics and Well Written Essays - 1500 Words. https://studentshare.org/business/2078145-industry-and-business.
“Industry and Business Case Study Example | Topics and Well Written Essays - 1500 Words”. https://studentshare.org/business/2078145-industry-and-business.
  • Cited: 0 times

CHECK THESE SAMPLES OF Industry and Business

Corporate Division Supply Chain Management

Therefore, giving the company the experience of being able to study the Industry and Business and also build on loyal consumers.... The company had its vision on introducing new products in the pharmaceuticals industry and they wanted to do so in good management system so as to save on money and produce quality goods.... he industry was used to the traditional way of doing business and the effect that the economy had on inventories did not seem to receive much attention....
8 Pages (2000 words) Essay

Hospitality Reception Work

nclusion of a multidisciplinary social science driven curriculum which balances the vocational and action orientation with that of liberal and reflective orientation will enable the students to better respond to the dynamics of the international hospitality Industry and Business environment and hence become better hospitality managers as they will be able to think broadly (Baker and Huyton,2000).... Furthermore, hospitality industry is a cross culture industry and hence the need to understand the differing cultures....
8 Pages (2000 words) Math Problem

Innovation Management - Abu Dhabi National Oil Company

Being a state-owned institution, it has had to deal with the political perspective of the business compared to other privately-owned companies.... ADNOC also has several subsidiaries that help it to operate in its wide scope by capturing different aspects of the petroleum industry (ADNOC)....
6 Pages (1500 words) Case Study

Exploring Marketing Research

Porter five forces analysis is a framework to analyse the level of competition within an Industry and Business strategy development.... (Wood, 2003) business Unit Level Strategy Since the main objective of sportUNE is to increase the number of customers, the methods to be used are identified in this level of strategy.... Since the business involves different departments, inputs can be easily exchanged in the departments.... Porter's five forces Competition is an evitable part of a business environment....
8 Pages (2000 words) Case Study

Industry and Business Strategy in Which the Company Operates in for Competitive Forces

… The paper "Industry and Business Strategy in Which the Company Operates in for Competitive Forces" is a wonderful example of an assignment on management.... nbsp; The paper "Industry and Business Strategy in Which the Company Operates in for Competitive Forces" is a wonderful example of an assignment on management.... Porter's five forces model is a framework analyzing the Industry and Business strategy in which the company operates in for competitive forces....
8 Pages (2000 words) Assignment

Global Managers' Role in Global Organizations

The skills pertinent for global mangers consist of cultural and cross-cultural awareness, global knowledge, technology know-how, Industry and Business know-how, international risk management, as well as standards for best practice.... Industry and Business know-how is a comprehensive knowledge of the business as well as its industry, which according to Barham, Younies and Smith (2011, 234) are vital for realizing organizational objectives.... (2003, 569), managing workers efficiently in organizations that carry out business internationally need cultural cognizance and the capability to react swiftly in dynamic settings....
6 Pages (1500 words) Literature review

Energex Employee Relations Strategy

The strategy also focuses on how employee relations contribute to attainment the company's business goals and constructive workplace relations.... … The paper 'Energex Employee Relations Strategy' is a good example of a management case study.... Energex is a fully-owned subsidiary of Energy Queensland Limited....
8 Pages (2000 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us