Contracts, Markets, and Laws in the US and Japan
Edited by Zenichi Shishido
Chapter 11: Regulation of bank shareholding: a functional and historical analysis
In this chapter, I explore regulations related to bank stock ownership. Specifically, I focus on bank shareholding as an activity that serves to render a financial institution as both equity holder and debtholder. In Japan, legislation related to this issue is housed under two types of law: banking law and antitrust law. This chapter analyzes these regulations from two perspectives. First, in line with the rest of this volume, I explicate the laws with a focus on legislative intent. Second, I adopt a historical perspective to inspect the laws. Generally speaking, banking laws are intended to ensure that banks operate in a fair and appropriate manner. Antitrust laws, on the other hand, are meant to respond to issues related to market power, particularly those associated with market competition. Superficially, the regulations related to bank shareholding in each area seem to align with that respective area’s purpose. The goal of this chapter, however, is to demonstrate that the regulations related to bank shareholding deviate from their traditional intentions. I will ultimately demonstrate, both functionally and historically, that bank shareholding regulation has truly served to control private benefits. In section 11.2, I will apply functional analysis to regulations related to bank shareholding to show that the regulations do not serve the typical purposes of banking or antitrust legislation.
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