ABSTRACT
Japan was expected to be financially disadvantaged by the 1988 Basel Accord. As previous chapters emphasized, many academics and members of the financial media believed that the Accord was designed by the United States to stem the international ambitions of Japanese banks by forcing them to adhere to the sorts of capital adequacy standards recognized by other industrial economies. This chapter commences by challenging this claim. Drawing from the political analyses of Tamura (2003b) and Sawabe (1995) and a string of econometric results by Wagster (1996), this section argues that significant amounts of Japan’s input went into the final drafting of the Accord. Moreover, financial market actors regarded the Accord as a victory for Japanese banks during the late 1980s. Institutional investors and credit rating agencies believed that Japan’s largest banks would easily meet the capital adequacy standards laid out in the MOF’s interpretation of the Accord.
