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To: Eric Brockett, BankZero Regional Manager From: Jonathan Abramson, Assistant Manager Subject: Currency Risk There are several similarities and differences between the U.S. and Japanese financial systems. To begin with, both have large secondary securities markets. Japan also had some similar regulations such as the Glass-Steagal Act to separate commercial banking from investment banking. Just like in the U.S., this regulation weakened and as of 1993, commercial banks in Japan were allowed to underwrite corporate securities as long as they had permission from the Ministry of Finance. But that is where the similarities end and the differences come into play. Unlike the U.S. system which is driven by market-oriented system, the Japanese financial system is driven by a banking- oriented system. The difference is that U.S. companies are not owned by banks and this causes the stock and public bond markets to be highly developed and prominent institutions. In Japan, banks own the companies they monitor and the bond market is underdeveloped. This makes for a major difference as to how in larger firms, stockholder-lender and manager-
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This note was uploaded on 09/07/2011 for the course ECON ECO 201 taught by Professor Unknown during the Spring '09 term at New York Institute of Technology-Westbury.
- Spring '09