吉田 康志

Although the Japan's "Big bang" reform, a comprehensive financial deregulation process, had removed many of the banking regulations, the banking industry is still one of the most regulated industries in Japan. In the generality, the bank regulation system of Japan is characterized by two regulations: one is the deposit interest rate regulation for the era of high-speed economic growth, and the other is the minimum capital requirement for the era of financial deregulation. On the other hand, it is not necessarily obvious that such regulations have been executed efficiently, as a matter of fact. The purpose of this paper is to reconsider whether the Japanese system of bank regulation including rules regarding the deposit interest rate and capital adequacy ratio has been efficient or not through the lens of the "Financial Restraint model." As a result, it turned out that it was important for the banking regulators to recognize the adequate level of the deposit interest rate or the capital adequacy ratio determined by the "Financial Restraint model" in order to attain the efficient bank regulation. The bank regulation system in Japan, however, could not be efficient due to the fact that the regulators did not know the adequate level of interest rate and capital ratio based on the model. Furthermore, we cannot rule out the possibility that the regulation system in fact induced the risky investment by banks. The important implications are as follows: 1) the regulators should recognize the Financial Restraint model to achieve the efficient regulation, and 2) banks are recommended to manage their business with farsighted vision for the purpose of the prudential policy.