ABSTRACT
Japan's financial turmoil has focused the world's attention on the severe short-comings of Japanese financial institutions (JFIs). Many of the traits condemned were viewed as Japanese strengths within the past decade. Political reformation is viewed as the cure for the various ailments which seem to afflict Japan and Asia. Manufacturers make physical products; financial institutions deal in abstractions. Asian financial institutions, both public and private, have proven themselves incapable of allocating financial resources without suffering massive losses. The outside world tends to perceive Japanese manufacturing and financial institutions as a monolith. In fact, these institutions remain systematically different. The legacy of the Faustian bargain between Ministry of Finance (MoF) and the JFIs are the structurally flawed JFIs of today. Market participants were forced to go to the MoF for administrative guidance on all matters. When America's financial institutions are compared to the JFIs, commentators generally take bits and pieces of the American system.
