Founder and CEO, Europacifica Consulting

Naomi Fink

Founder and CEO

Europacifica Consulting

Thematic (Sector/Industry)

Japan Financials / Thematic (Sector/Industry)

One of the enduring questions regarding Japan’s “lost decades of growth” remains the degree to which failure to grow owes to insufficient countermeasures to address (a) demographic changes and (b) belated and incomplete adaptation of the services sector in particular to globalisation.In our view, there are both structural as well as idiosyncratic policy-related contributors to Japan's failure to grow.  As such, a firm grasp of the structural as well as policymaking backdrop of more recent structural reform campaigns is a pre-requisite to meaningful assessment of Abenomics.In <a href="https://www.smartkarma.com/insights/structural-reform-i-the-japanese-financial-sector" target="_blank" data-smartkarma-citation="insights:6375">Structural Reform I: The Japanese Financial Sector</a> , we provided an overview of the current structural characteristics of Japan's financial sector, in context of both financial and capital market reforms.  In this instalment, we take a look at the history of financial reform in the context of Japan's political economy.The importance of this historical analysis is as follows: we find that the combination of a strong bureaucracy, a high level of per-capita GDP at the outset (prior to the lost decade) and redistributive dynamics between industrial sectors have softened the impact of deflationary shocks but allowed policy immobilism to flourish.

 One of the enduring questions regarding Japan’s “lost decades of growth” remains the degree to which failure to grow owes to insufficient countermeasures to address (a) demographic changes and (b) belated and incomplete adaptation of the services sector in particular to globalisation.In our view, there are both structural as well as idiosyncratic policy-related contributors to Japan's failure to grow.  As such, a firm grasp of the structural as well as policymaking backdrop of more recent structural reform campaigns is a pre-requisite to meaningful assessment of Abenomics.In Structural Reform I: The Japanese Financial Sector , we provided an overview of the current structural characteristics of Japan's financial sector, in context of both financial and capital market reforms.  In this instalment, we take a look at the history of financial reform in the context of Japan's political economy.The importance of this historical analysis is as follows: we find that the combination of a strong bureaucracy, a high level of per-capita GDP at the outset (prior to the lost decade) and redistributive dynamics between industrial sectors have softened the impact of deflationary shocks but allowed policy immobilism to flourish.

Sumitomo Mitsui Financial Group (8316 JP)

Mitsubishi UFJ Financial (MUFG) (8306 JP)

Sumitomo Mitsui Financial Group (Sponsored Adr) (SMFG US)

Sumitomo Mitsui Financial Group (Sponsored Adr)

Tokyo Kiraboshi Financial Group (7173 JP)

Mitsubishi UFJ Financial (MUFG) ADR (MUFG US)

Structural Reform II: Political Economy Backdrop