Financial Institution, Asset Bubbles and Economic Performance

Tomohiro Hirano and Noriyuki Yanagawa
Additional contact information
Tomohiro Hirano: Financial Research and Training Center, Financial Services Agency, The Japanese Government
Noriyuki Yanagawa: Faculty of Economics, University of Tokyo

No CARF-F-234, CARF F-Series from Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo

Abstract: This paper explores the relation between the quality of financial institution and asset bubbles. In this paper, we will show that bubbles can improve the macro performance even if the quality of financial in- stitution is very poor and the financial market does not work well. In this sense, the high quality of financial institution and bubbles are substitutes. We will explore, however, that they are not perfect substi- tutes. Bubbles may burst. If bubbles burst, the economic performance must go down if the quality of financial institution is low. Hence, we will show that not relaying on bubbles, but improving the quality of financial institution is important for long run macro performance.

Pages: 28 pages
Date: 2010-10
New Economics Papers: this item is included in nep-ban
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Citations: View citations in EconPapers (2)

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https://www.carf.e.u-tokyo.ac.jp/old/pdf/workingpaper/fseries/244.pdf (application/pdf)

Related works:
Working Paper: Financial Institution, Asset Bubbles and Economic Performance (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:cfi:fseres:cf234

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