Evolution Of The Japanese Financial Policy And Japanese Real Estate Bubble(1980-1992)

In the last two decades of 20th century, The Japanese economy dropped to the bottom from summit. Japanese expansionary financial no doubt played a most important role in the process. Most scholars believe that the financial liberalization and the subsequent expansion of the financial policies constituted a bubble economy and the Japan's economy depression.Since 21th century the real estate prices are one way rising in the whole world, and which drew a world wide attention. The bubble economy in 1980s is undoubtedly the most impressive one. The decade lasting bubble economy profoundly affected the Japanese politics, economy and even daily life, which was known "the lost 10 years". In the 20th anniversary of Japan's bubble economy, it seems important and necessary to research and review the internship of the real estate and the financial policy.This paper based on the analysis of the reasons for Japan's financial policy draws a conclusion that Japan made the third generation world manufacturing center after following Britain and the United States in 1980s. This has caused trade friction further upgrade in Japan and USA. Although Japan from American handed the "world factory" title, but the international monetary system remains with the dollar as the center. Therefore, the dollar as the center for international monetary system caused global production system and international monetary system is not matching contradiction to deepen. Meanwhile, in order to avoid trade surplus increased in Japan and USA, it had to exchange rate reform, and its purpose is to make the yen into internationalization, then Yen established as the new international monetary system center. because of the impact from internal and external causes. Japan has to carry on its expansionary financial policy by official interest decrease, "window guidance" and rate liberty. This expansionary policy caused a rapid rise in the real estate in three ways. Firstly, the policy reduces the cost of money collection by the behavior. Secondly, it made a fake boom in stock prices, stimulate the demanders to issue new shares and convertible bonds to collect money. Thirdly, the increasing price of land and stock improve the values of the enterprises stock. Therefore, the owners are able to collect more money. This led to real estate bubbles.In short, this article aims at getting to the effect changes and its effects. Japanese financial policies on real estate bubbles by analyzing its changes in the late 80s of the 20th century and the new policies. This research helps us have a good understanding of the real issues of the real estate bubble like problems newly in China.