Japan, Europe, and International Financial Markets Analytical and Empirical Perspectives

The deregulation of financial markets in various nations in the 1980s brought about not only a qualitative change in their operation but also a greater integration among these markets. These changes enabled the free flow of financial resources across borders, and private and public institutions in each economy now have the ability to draw on the strengths of foreign markets to meet their individual needs. But many observers in Japan, Europe, North America and elsewhere fear that the new freedom has contributed to a greater instability in individual markets and the transmission of these swings to other markets. This book examines the ramifications of these trends.

The deregulation of financial markets in various nations in the 1980s brought about a qualitative change in their operation and a greater degree of integration among these markets. These changes enabled the free flow of financial resources across borders, which allows private and public institutions in each economy the ability to draw on the strengths of foreign markets to meet their individual needs. But many observers in Japan, Europe, North America and elsewhere fear that the new freedom has contributed to a greater instability in individual markets and the transmission of fluctuations to other markets. The introduction and individual chapters in this 1994 book examine the ramifications of these trends.

Introduction and overview; 1. Policies and exchange rates: a simple analytical framework; 2. An overview of (older) exchange rate theory; 3. Second thoughts on EMU; 4. Investment flows and performance: evidence from mutual funds, cross border investments, and new issues; 5. Accumulation of net external assets in Japan; 6. Relative trade goods prices and imperfect competition in United States manufacturing industries; 7. Synthetic eurocurrency interest rate futures contracts: theory and evidence; 8. The volatility of Japanese stock indices: evidence from the cash and futures markets; 9. Capital markets and the banking sector: efficiency of Japanese banks in reducing agency costs; 10. Risk adjustment deposit insurance for Japanese banks; 11. Competition in retail banking markets: a comparison of Britain and Japan.

This revealing volume examines the ramifications of deregulation in various financial markets throughout the 1980s.