| Abstract: | Japanese banks are very large and were rigidly controlled until financial deregulation began in the late 1970s. This paper measures the impact of deregulation upon the trading efficiency and the levels of risk and return of the largest 27 listed Japanese banks. We found that as the pace of deregulation increased, there were significant increases in trading efficiency as well as in the levels of returns and risks. With deregulation, the Japanese banking system, which contains the largest banks in the world, has become less protected and more vulnerable to the discipline of market movements. |
