Mr Koizumi Japan's Financial System Reform During The Period Of Analysis

According to the Institutional determinism, institution is the only factor that determinethe economic growth while the capital, labor force or science and technologies takesonly the secondary position and they are only the representation of the economicgrowth caused by the transition and amelioration of the institution. Harmoniousinstitutions can efficiently promote the economic development, while unbalancedinstitution will become the inhibitor of economic growth. In order to revive Japan’seconomy from the long suffered depression, the Koizumi Cabinet, holding the beliefthat “Without reforms, no gains”, started the5years long financial system reform.Leading by the financial regeneration plans and the financial reform plan, theproblem of the non-performing loans that had long limited the commercial banks wasefficiently controlled, the performance of enterprises was promoted dramatically andat the same time the number of bankrupt enterprise decreased largely, which provideda benign economic environment for the recovery of the Japan’s economy. The reformof the financial supervision system defined and expended the responsibility andindependency of Japan’s Financial Services Agency and Bank of Japan, whichresolved the potential financial risks for the revival of Japan’s economy. The activestock market and the largely increased private investment have decreased theproportion of the indirect finance, providing a platform for the fusion of direct andindirect finance. Pushed by the reform, Japan’s economy at last had get rid of thedepression that had lasted for more than10years and started a new round economicrecovery.