The United States and United Kingdom activities of Japanese banks, 1980–1988

Abstract

This paper analyzes the United States and United Kingdom activities of Japanese banks by integrating their activities in these two markets with the regulatory environment for banks in Japan and Japan's overall external financial position, as well as with business opportunities in the two host countries. The paper concludes that the regulatory environment in Japan, including restraints on interest rates and possible quantitative restraints, has had an impact on activities of Japanese banks in these two foreign markets.

Japanese banks appear to have adjusted to their domestic regulatory environment by using their London branches as a flexible funding source and their U.S. offices in extending commercial and industrial loans to Japan-based companies as well as a substitute location for interbank trading. In both markets Japanese banking offices are large net barrowers from unrelated banks because of constraints on raising funds in their homer market.