Deflation and investment activities of banks. The case of Japan in the years 1993-2008
DOI:
https://doi.org/10.12775/EQUIL.2010.015Keywords:
deflation, debt-deflation, bank investment portfolioAbstract
The purpose of the article is to identify determinants of investment activities of banks during deflationary process. Japanese experience suggests that the processes of long-term deflation have a substantial impact on the structure of assets and liabilities of banking institutions. In conditions of deflation and 'liquidity trap', classic, deposit-credit activities of banks do not produce adequate profits. As a result it influences negatively bank?s profitability. In this situation banks tend to look for other sources of revenue such as commissions and investment activities. Article shows causes and effects of changes in banks' balance sheets. It is also an attempt to answer the question whether there are possibilities to build an investment portfolio that help to avoid the negative effects of deflation processes.
Downloads
References
Bank of Japan, (2005), Financial Stability Report, Bank of Japan, Tokyo
Bank of Japan, (2006), Financial Stability Report, Bank of Japan, Tokyo
Bank of Japan, (2007, Financial Stability Report, Bank of Japan, Tokyo
Bank of Japan, (2008), Financial Stability Report, Bank of Japan, Tokyo
Bank of Japan, (2009), Financial Stability Report, Bank of Japan, Tokyo
Bank of Japa n - http://www.boj.or.jp/en/theme/stat/index.htm
Capple F., Wood G., (2004), Price Change, Financial Stability, and the British Economy 1870-1939 w: Burdekin R.C.K., Siklos P.L., [ed], Deflation. Current and Historical Perspectives, Cambridge University Press, Cambrigde UK
Farrell Ch., (2004), Deflation. What happens when prices fall, HarperBusiness, New York
Shilling A.G., (1999), Deflation. How to survive and thrive in the coming wave of deflation, McGraw Hill, N.Y.
Goodhart Ch., Hofmann B., (2004), Deflation, Credit, and Asset Prices, w: Burdekin R.C.K., Siklos P.L., [ed], Deflation. Current and Historical Perspectives, Cambridge University Press, Cambrigde UK
Hasano K., Sakai K., Tsuru K., (2007), Consolidation of Banks in Japan. Causes and Concequences, NBER Working Paper 13399, Cambrigde MA
Kozioł W., (2009), Deflacja a zarządzanie instytucją bankową, w: Pawłowicz L., Czerwińska M., (red), Społeczno-ekonomiczne wymiary globalnego kryzysu finansowego. Prace i Materiały WZ UG, Sopot 2009, s. 255 i kolejne
Krugman P.R., (1999), The Return of Depression Economics, Foreign Affairs, vol 78, No.1
