The Effect of Regulation and Deregulation on the Financial Industry

Abstract

The financial sector in Japan has been heavily regulated. Currently, deregulation of financial activities takes place through both market forces, and institutional and legal reforms initiated by the demand by the private sector and seconded by the public authority. Although deregulation or liberalization is a general trend, reregulation is also observed in some fields. The purpose of this chapter is to discuss the reasons why both deregulation and reregulation have been the major policy issues, and to evaluate the economic consequences of these policy reforms. Since the argument on financial deregulation and reregulation includes a large number of subjects, we restrict our attention only to several selected areas.