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Japanese and Chinese Banking Gets Risky
Book by Long Island University economics professor
details challenges for Asian banking systems
December 11, 2000 -- Banking is risky business. Not that you
would know that by observing Japanese and Chinese bankers. They
operate more like accountants than bankers, according to The
Rise and Fall of Abacus Banking in Japan and China, a new
book co-authored by Panos Mourdoukoutas, a resident of Plainview
and an economics professor at the C.W. Post Campus of Long Island
University in Brookville, N.Y.
"If you visit a Japanese or Chinese bank today, everyone
has an abacus, or ancient calculator, on their desks," says
Mourdoukoutas. "They use the abacus to monitor the flow
of money in and out of the bank - just like an accountant would.
They spend so much time on the abacus that they have not learned
to manage the risk inherent in banking."
That wasn't a problem until now. Today, however, competition
among Japanese banks is increasing due to deregulation and the
economy is slowing. In China, government ownership of banks and
interest rate controls, which had virtually eliminated credit
risk, are begin eliminated. With China's upcoming entrance into
the World Trade Organization, reform of the banking system is
becoming increasingly urgent. Bankers in both countries must
learn to manage credit risk, and to deal with transparency and
full disclosure rules and regulations, Dr. Mourdoukoutas says.
Western solutions -- cleaning up balance sheets, canceling non-performing
loans and the like -- can help. But the inherent problem these
systems face lies with the bankers themselves.
"Japan is already experiencing a banking crisis, partly
because of these shortcomings," says
Dr. Mourdoukoutas, who co-authored his book with Yuko Arayama,
an economics professor at Japan's Nagoya University. "China
doesn't have an open banking crisis -- yet. But it will experience
one if Chinese bankers don't learn to deal with risk."
To learn more about Dr. Mourdoukoutas' theory on revitalizing
the Japanese and Chinese banking systems, contact him at (516)
299-2321 or email Mourdouk@liu.edu.
To purchase a copy of the book, which retails for $59.95 contact
Quorum Books at www.greenwood.com or 1-203-226-3571.
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