The following measures to boost banks’ capital were implemented from December 1997 through March 1998 in Japan: (1) Banks were given the option to choose the cost method in the valuation of their ...equity portfolios. (2) Reevaluation of bank property assets at current market values was introduced. (3) Public funds were injected into the banking system. This article examines whether or not the announcements of these measures have had any impact on stock prices. We find: (1) The announcement of the introduction of the cost method in the valuation of equity portfolios had a limited effect on stock prices. (2) The announcement of reevaluation of property assets had a relatively strong impact on stock prices. (3) The aim of capital injection by the government might be interpreted by investors in general as an attempt to favor weak banks rather than to bolster the capital base of strong banks.
This paper was presented at the conference "Financial services at the crossroads: capital regulation in the twenty-first century" as part of session 1, "Impact of capital requirements on bank risk ...taking: empirical evidence." The conference, held at the Federal Reserve Bank of New York on February 26-27, 1998, was designed to encourage a consensus between the public and private sectors on an agenda for capital regulation in the new century.
A study is presented that investigates the assertions of critics of the use of fair value accounting to estimate the value of investment securities. The regulatory risk associated with capital ...adequacy ratios based on fair value accounting is addressed using earnings calculated through the use of disclosed fair value estimates of banks' investment securities and Basle capital adequacy ratios. Athough earnings are more volatile under fair value accounting, this increased volatility does not necessarily represent a proxy of economic risk. The assertion that investors generally demand an excessive premium because of the increased volatility associated with fair value accounting is not supported by any strong empirical evidence. When investors value low-capital-ratio banks' shares, fair value earnings provide more useful information than do historical cost earnings. The perceived volatility in fair value earnings incremental to that in historical cost earnings in the valuation of low-capital-risk banks' shares can be interpreted as regulatory risk associated with fair value accounting and it indicates the importance of the accounting framework of the Basle capital adequacy formula.
Analysis of credit spread in Japan's corporate bond market Hattori, Masazumi; Koyama, Koji; Yonetani, Tatsuya
The changing shape of fixed income markets: a collection of studies by central bank economists,
2001, Letnik:
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Book Chapter
We analyzed clinical characteristics and surgical results in 44 patients aged 70 years or more with ruptured intracranial aneurysms operated on within 72 hours of hemorrhage. In comparison with a ...non-aged group of 264 patients aged less than 70 years (126 men and 138 women), the aged group (6 men and 36 women) showed a distinct female preponderance. The most common parent artery of ruptured aneurysm was the internal carotid artery in the aged group, while it was the anterior cerebral artery in the non-aged group. There. was no significant difference in the preoperative clinical grades (Hunt & Kosnik classification) between the two groups. Although delayed ischemic neurological deficit (DIND) appeared in both groups at almost the same frequencies, 32% and 34% for the aged and non-aged group, respectively, the incidence of permanent DIND was higher in the aged group (50%) than in the non-aged group (36%). The comparative studies on surgical results in each clinical grade revealed that outcomes of Grade IV patients were extremely poorer in the aged group (92% poor outcome) than those in the non-aged group (58% poor outcome, p=0.02). Although Grade III patients in the aged group also showed poorer outcomes, it did not reach statistical significance. Overall outcomes in a subgroup of patients aged 70-74 were almost the same as those in the non-aged group. Thus indications for early aneurysm surgery in aged patients, when their ages are under 75 and clinical grades below G III, are determined with the same standards as in non-aged patients. Among the factors accounting for poor outcome of each patient, the incidence of primary brain damage was higher in the aged group (53%) than that in the non-aged group (43%). These results indicate that the major cause of poor outcomes of aged patients is a poor recovery from brain damage due to either primary hemorrhage or symptomatic vasospasm.
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