Mr. Ezekiel, economist in the Research and Statistics Department, is a graduate of the University of Bombay. He taught economics at St. Xavier’s College, Bombay, and at the Department of Economics, University of Bombay, and was Financial Editor of The Economic Times. He has published several articles in economic journals and is the author of The Pattern of Investment and Economic Development, to be published shortly by the University of Bombay.
“In Japan, where no markets for short-term government securities or discounted bills exist, the call money rates are the only short-term rates and accordingly the leading indicator of money market conditions.” See Bank of Japan, Money and Banking in Japan (Tokyo, 1964), p. 73.
This is somewhat surprising because the call loan brokers through whom call money transactions are carried out are entitled to transfer funds between their offices through the Bank of Japan’s teletype transfer service.
Formally, these dealers are now principals, but actually they are still, for the most part, brokers.
The local banks borrow very little from the Bank of Japan. At the end of 1962 and of 1964, such borrowings constituted only 0.14 per cent and 0.15 per cent, respectively, of their total liabilities.
Included here are the Central Cooperative Bank for Agriculture and Forestry and the Credit Federations for Agricultural Cooperatives.
The Japanese Monopoly Corporation, the Japanese National Railways, and the Nippon Telegraph and Telephone Public Corporation. (The funds of the recently established Atomic Fuel Corporation are not treated as Treasury funds.)
The Agriculture, Forestry, and Fisheries Finance Corporation; the Small Business Credit Guarantee Corporation; the Housing and Loan Corporation; the Small Business Finance Corporation; and the Hokkaido and Tohoku Development Corporation. The funds of two corporations (the People’s Finance Corporation and the Public Enterprise Finance Corporation) are not treated as Treasury funds. The funds of the Export-Import Bank of Japan and the Japan Development Bank are also not treated as Treasury funds, though these banks are government banks.
“The major aim of this new system is to restrain the tendency among financial institutions to excessively rely on borrowings from the Bank of Japan …,” Bank of Japan, Annual Report, 1962, p. 79.
A detailed description of these formulas is given in Hugh T. Patrick, Monetary Policy and Central Banking in Contemporary Japan (Bombay, 1962), pp. 121-28.
See footnote 8, page 37.
Bank of Japan, Annual Report,1963, p. 66.
See pages 26 and 32-33.
The Bank of Japan regularly publishes separate quotations for the interest rates prevailing in the Tokyo and Osaka markets for unconditional money, overnight money, and unconditional overmonth loans.
In Japan, “Interest rates are subject to a number of artificial controls which hamper the development of the market and distort the pattern of interest rates,” Bank of Japan, Money and Banking in Japan (Tokyo, 1964), p. 79.
As a result of extreme tightness in the market, “the call rate actually remains fixed at the ceiling … agreed to by banks, and it is not at all a rare case that the rate soars above this level, especially when the tight money policy is in effect,” Bank of Japan, Money and Banking in Japan (Tokyo, 1961), p. 27.
The formula for conversion is
In April 1963, the minimum reserve ratio requirements had been extended for the first time to the mutual loan and savings banks and credit associations with assets of more than 20 billion yen.
The existence of serial correlation was determined by applying the Durbin-Watson Test. Adjustment for the presence of serial correlation was made by using the method presented by L. R. Klein, A Textbook of Econometrics (New York, 1956), p. 159.
Hannan Ezekiel, “The Call Money Market in France,” Staff Papers, Vol. XII (1965), pp. 385-408.