Japanese Banks in Mexico: The Role of Government in Private Decisions
| Published date | 01 December 1991 |
| Date | 01 December 1991 |
| DOI | 10.1177/002070209104600405 |
| Subject Matter | Article |
FRANCES
McCALL
ROSENBLUTH
Japanese
banks
in
Mexico:
the
role
of
government
in
private
decisions
By
at
least
one
measure
Japan's
commercial banks
are
the
most
important
players
in
international
financial
markets.
Loans
by
Japanese
banks
account
for
nearly
40
per
cent
of
the
US$8.
5-
trillion pool
of
international
financial
assets,
far
outstripping
the
1o
per
cent
or
so
held
by
American
banks.'
The
gap
between
the
respective
foreign
loan
portfolios
ofJapanese
and
American
banks
has
been widening
every
year
since
Japanese
banks
over-
took
American
banks
as
the
largest
national
group
of
private
creditors
in
1987.2
As
long
as
this
trend
shows
no
signs
of
rever-
sal,
understanding
how
and
to
what
extent
the
Japanese
govern-
ment
constrains
the
foreign
operations
of
Japanese
banks
will
be
increasingly
important
to
an
accurate
analysis
of
international
financial
flows
and
their
political
consequences.
The
proposition
of
this
paper
is
that
the
Japanese
govern-
ment
supports
the
profit-seeking
ofJapanese
banks
to
a
margin-
ally
greater
extent
than
the United
States
government
does
for
its
banks.
Japan's
multi-member district/plurality
electoral
Graduate
School
of
International
Relations
and
Pacific
Studies,
University
of
California,
San Diego.
I
would
like
to
thank
Kim
Suyehiro
for
outstanding
research
assistance
and
Gabriel
Szekely
for
funding her
research
as
well as
my
trip
to Mexico
through
his
University
of
California
Pacific
Rim
Project
on
'Japan,
the
United
States, and
Mexico.'
I
am
also
grateful
to
Miles
Kahler,
David
Mares,
Lisa
Martin,
Barbara
Stallings,
and
Steven
Weber
for
helpful
suggestions
when
I
presented
part
of
this
material
at
the Workshop
on
Conceptual Approaches
to
the
Third
World
at the
Center
for
Iberian
and
Latin
American
Studies,
t(:s
o,
on
18
May
1991.
i
'Japanese
banks
dominate
international
market,'Jiji
Tsushin,
14
March
1991.
2
IMF
International
Financial
Statistics
(September
199,o).
International
Journal
x
L'
vi
autumn
1991
JAPANESE
BANKS
IN
MEXICO
669
system
gives
Japanese
banks,
along
with
other
groups
of
produc-
ers,
a
privileged
position
in
the
Japanese
policy-making
process.
When
the
foreign
policy
goals
of the
Japanese government
clash
with
the
profit-seeking
goals
ofJapanese
banks, the
government
avoids
taking
measures
that
interfere
with
bank
profits.
This
leads
to
policy
combinations
which
appear
superficially
to
be
internally
contradictory.
For
example,
we
should expect
to
see
the
Japanese
government championing
tough
conditionality
in
sovereign
loan
negotiations
and
in
international
financial
insti-
tutions
on
behalf
of
Japanese
bank
interests.
At
the
same time,
it
is
to
be
found
increasing foreign
aid
allocations
to
ameliorate
pressure
from the
United
States
and
other
trading
partners
to
take
on
more of
the
burden
for
international
development
and
prosperity.
The
recent
history
of
the
involvement
of
Japanese
banks
in
Mexico
highlights
the
main
contours of
the
relationship
between
Japan's
domestic
bank
policy
and
its
foreign
policy
require-
ments.
As
of
i
988,
the
stock
of
Japanese
private
bank
loans
to
Latin
American
countries
exceeded
that of
loans to
developing
countries
in
Asia,
and
Mexico
was
the
single
largest
borrower
in
Latin America
(see
table
I).
In
the
late
198os,
the
adoption
of
an
8-per-cent
capital-asset
ratio
by
the
Bank
for
International
Settlements
(Bis)
and
volatility
in
bank
share
prices
induced
Japanese
banks
to
cut
back
their
exposure
to
Mexican
default
risks.
Looked
at
in
isolation,
the
refusal
of
Japanese
banks
to
lend
new
money
to Mexico
would
generate
criticism
from
Washing-
ton
and
elsewhere
that
Japan
was
acting
on
its
narrow
self-
interest,
taking more
from
the
international
economic
system
than
it was
giving
in
return.
Irrespective
of
the
merits
of
the
criticism,
Japan's
single
most
important
foreign
policy
goal
is
to
avoid
a
serious
rift
with
the United
States.
Thus,
even
though
Japan's
Ministry
of
Finance
has
not
tried
to
dissuade
Japanese
banks
from
reducing
their
outstanding
loans
to Mexico,
the
government
has
poured
in
new
official
aid
in
line
with
United
States
requests.
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