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Title: Bank competition, efficiency, productivity, and the impact of quantitative easing in Japan
Author: Vu, Anh Nguyet
ISNI:       0000 0004 6350 1419
Awarding Body: University of Sussex
Current Institution: University of Sussex
Date of Award: 2017
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The Japanese banking system provides a distinctive platform for the examination of the long-lasting effect of problem loans on bank performance. Japan is also known for an extended quantitative easing programme of unprecedented scale. Yet the links between risk-taking activities, quantitative easing, and bank competition are largely unexplored. This thesis employs a unique database, which allows us to distinguish between bankrupt and restructured loans. The aim of the thesis is to investigate the impact of these loans on Japanese bank efficiency and productivity growth, as well as their relationship with bank competition and quantitative easing policy. We measure technical efficiency by modifying a translog enhanced hyperbolic distance function with two undesirable outputs, identified as problem loans and problem other earning assets. Further analyses reveal that bankrupt loans affect efficiency in a manner related to the “moral hazard, skimping” hypothesis, with the causality originating from bankrupt loans. In contrast, the relationship between restructured loans and efficiency supports the “bad luck” hypothesis. We also follow the parametric approach to quantify the impact of bankrupt and restructured loans on productivity growth of the Japanese banking system. We further perform convergence cluster analysis to examine convergence in productivity growth between regions, where limited convergence is reported. Additionally, this thesis employs, for the first time, the bank-level Boone indicator to measure bank competition in Japan to examine the underlying linkages between quantitative easing, competition, and risk. Given the scale of problem loans, we measure bank risk-taking based on bankrupt and restructured loans. Our analyses show that enhancing quantitative easing and competition would reduce bankrupt and restructured loans, but it would negatively affect financial stability. In light of the ongoing negative interest rates and quantitative and qualitative easing policy to enhance economic growth in Japan, this thesis would provide insightful implications for policymakers and regulators.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: HG2397 By region or country