Developments Since the Big Bang $(20012008)$

Entering the $2000$s$,$ the non performing loan problem reached a turning point.

Prime Minister Junichiro Koizumi championed structural reform and oversaw the final clearing of this bad debt from the banking sector based on a Financial Revitalization Program in October $2002$ that prioritized eliminating nonperforming loans. The clearing of nonperforming loans had been proceeding slowly in the banking sector through write offs to bad loan reserves. A different approach was needed because this method was not providing a fundamental solution to the problem. Banks were henceforth permitted to directly dispose of their nonperforming loans and proceeded to remove these bad debts from their balance sheets. Because unlike the indirect method this approach threatened dangerously low levels of capital reserves at banks, a rise in bankruptcies in the corporate sector, and an increase in unemployment, the government took steps to control its adverse effects. It injected capital into banks to maintain the stability of the financial system and established restructuring mechanisms for corporations. These mechanisms included the enactment of the Civil Rehabilitation Act and of the function of the Resolution and Collection Corporation $($RCC$)$ and the setting up of the Industrial Revitalization Corporation of Japan $($IRCJ$).$Under the slogan of$$From Savings to Investment,$$Japan$$s government also implemented policies and programs to shift to a market$-$based financial system with a strongly rooted securities market at its core in which a diverse range of investors would participate. The policies and programs included the Basic Policies for Economic and Fiscal Management and Reform $($June $2001)$; the Program for Structural Reform of Securities Markets $($August $2001)$; and the Program for Promoting Securities Markets Reform $($August $2002).$ These policies and programs put an emphasis on the expansion and improvement of sales channels $($lifted a ban on banking and securities joint branch offices and introduced a securities intermediary system$)$; the diversification of financial instruments and services $($lifted a ban on wrap accounts, etc.$)$; and the fairness and transparency of the financial business $($thorough disclosure and the greater supervisory oversight of audit corporations, etc.$).$ The authorities aimed at establishing a market that participants would have confidence in and that would attract a wide range of investors. Thanks to

their reforms, the allocation of household financial assets into risk$-$class assets, such as equities, bonds, investment trusts, and other securities$,$ trended upward until $2006.$ The reforms also, however, resulted in an increase in the number and volume of complex financial products and transactions that demanded a comprehensive set of regulations to ensure the thorough observance of investor protection rules and the coverage of an expanding and increasingly diversified range of investment instruments. In response, the

the government revised the Securities and Exchange Law, reintroducing it as the Financial Instruments and Exchange Act. In the aftermath of the financial Big Bang, inter$-$market competition between exchanges got under way in earnest. The competition was focused on attracting new listings and more transaction volume. The exchanges started targeting new listings around $2000,$ launching start$-$up company markets and growth companies whose shares they successively listed on exchanges. In the battle for greater transaction volume, Tokyo Stock Exchange quickly took the lead. The TSE introduced electronic stock trading and off$-$floor trading, strengthening its dominant position. The concentration of stock trading on the TSE, however, produced a notable decline in support for regional stock exchanges, leading to successive reorganizations that began around $2000.$

The question $($Please answer quickly$)$

Elaborate on the development of the stock exchange in Tokyo after the financial Big Bang. Elaborate the expected and unexpected events in the Tokyo Stock Exchange! Evaluate those events related to the chapter$//$topic about "Capital Market History" you learned! $(4$ points$)$