This should logically have rung alarm bells among investors, especially among banks’ uninsured debt holders, at some point. However, the opposite seems to have happened: the markets rewarded size by charging lower debt margins from the biggest institutions. 6 This suggests that there was a perception among market participants that the biggest financial institutions enjoyed an implicit public guarantee.
It likewise enjoys an important place in Japanese economic history, having nurtured a great statesman like Takahashi. Takahashi economic policy As I mentioned at the start of my remarks, among Takahashi’s many achievements we are particularly interested in a series of macroeconomic measures – called the Takahashi Economic Policy – which were put in place to respond to the Showa Depression of 1930–31.