Case Study: 1980 Japan RE Boom

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Case Study: 1980 Japan RE Boom
The governments main purpose weathere local of federal is to put their influence on land use for the “highest and Best use”. There are a few possible ways it can do this, some are: deregulation, regulation, or higher and lower taxes. This essay will discuss the issues that caused the Japanese market boom. I will summarize an answer the case, analyze the situation, the incentives that were gained from the roles of credit, and the government influenc it had in the market.
In the article, “ The effect of bank credit on asset prices: Evidence from the Japanese real estate boom during the 1980s” it goes over on whether bank credits fuel assest process after seeing the comparision between banks losing their blue chip
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Thereby having a positive flow of cash will increase land prices and overall net worth of firms; this is also the same for asset holdings (Nada, 2008). Iwaisako in “96” helped shine some light on the “debate on land price inflation, and banks roles in fueling real estate lending (Nada, 2008, p.59).” There was another paper that was written by Peek and Rosengren in 2000 that showed Japanese Markets and when their lending slowed down the construction projects in the U.S. fell as well (Nada, 2008). In the first part of the study it tested to see who was the main force in bank lending. The second part was how bank credit affected the value of land. Then third part was just the conclusion. In 2001 Hoshi, reported that individual bank data showed an “increase in the proportion of loans to the real estate sector in the 1980’s led to higher non-performing loans in 1998 (Nada, 2008, p.61).” A governmental factor that influenced the Japanese market is for example a decline that was seen in the 1980’s after a foregin exchange law. Hoshi and Kashyap debated that a change in deregulation, combined with the limited liability policy, could possible explain why banks didn’t get smaller when losing keiretsu (Nada, 2008). One way of looking at this study is that the saving options that were on the households had no effect because people were still putting money in their banks. The Japanese…show more content…
The keiretsu, banks, and Japanese government with their controls, limits, and other regulations was all done for the reason of profit. The shift in lending practices in banks was by the keiretsu who placed their dependency on other capital markets while the Bank of Japan and Ministry of Finance had their focus on rising prices but ultimately only saw a rise with a steady pace. This showed that a land bubble was unexpected. The bubble was then only stabilized with the correction in laws and capital markets, with the liberalization of the Japanese economy. Therefore is the controls were in place much earlier, this could have possible prevented the

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