Okayama Economic Review
Published by the Economic Association of Okayama University


Ichinose, Atsushi
Though a common view holds that bubbles bagan their formation from 1986, we cannot easily agree. Share prices, at least, began to contain bubbles from 1984. Though share prices during 1983-85 stayed within changes of so-called fundamentals, current profit of companies, which is one of the two fundamentals, contained profit from that very rise of share prices. Explaining bubbles through the concept of "fundamentals" will inevitably go around in circles. We should rather pay attention to the fact that at the end of 1984, the ratio of the total sum of shares to GNP, listed on all the stock exchanges, valued at current market prices, amounted to 56.1% which is an unprecedented high figure. The bubbles in share prices owed greatly to the positive absorption of overseas short-term fund by foreign exchange banks from 1984. They took advantage of the abolition, in 1984, of so-called yen-ten regulation, which had long restricted, to a degree, the banks' conversion of dollars, taken in from overseas financial centers, into yen. After the abolition some parts of the converted money were vigorously invested into domestic stock market. Greater part of the money taken in was appropriated to their own external investment, and the rest to security investment, particularly in shares. Consequently, share prices were raised. It is not that big banks were excluded from financing to big firms but that they remained doing so, transforming themselves into by far the biggest undertaker of so-called equity finance. The above mechanism evolves extensively throughout the stages offull-scale bubbles.
論説 (Article)