eabh	
  Papers	
  |	
  No.	
  16-­‐01	
  |	
  March	  2016	
  
	
  

The	
  role	  of	
  financial	
  elites	
  in	
  banking	  supervision	
  in	
  Japan	  from	
  1927	
  to	
  1998	
  
	
  
Eiji	
  Hotori	
  *	
  Yokohama	  National	
  University	
  
	
  
	
  
Abstract:	
  Following	
  the	  collapse	
  of	
  the	
  bubble	
  economy	
  in	
  Japan,	
  banking	  supervisors	
  and	
  bank	  examiners	
  were	  severely	
  criticized	
   by	
   the	   media	   as	
   human	
   capital	
   had	   long	
   been	
   viewed	
   the	   key	   element	
   of	
   Japanese	
   banking	
  supervision.	
   The	   purpose	
   of	
   this	
   paper	
   is	
   to	
   analyze	
   the	   bank	
   supervisors’	
   career	
   paths	
   over	   the	   long	
   term,	
  including	  ‘amakudari’	
  appointments	
  from	  among	  the	
  Directors	
  of	
  the	
  Financial	
  Inspection	
  Department	
   of	  the	
  Ministry	
  of	  Finance,	
  and	  the	
  Director-­‐Generals	
  of	
  the	  Bank	  Examination	
  Department	
  of	
  the	  Bank	  of	
  Japan.	
  The	  paper	
  analyzes	
  the	  performance	
  of	
  several	
  regional	
  banks	
  that	  accepted	
  the	
  appointment	
  of	
  an	
  ex-­‐Director	
  or	
  
an	
   ex-­‐Director-­‐General	
   as	
   their	   president	
   in	   order	
   to	
   examine	
   whether	
   such	   an	
   amakudari	
   relationship	
  worsened	
  such	  banks’	
  management.	
  The	  majority	
  of	
  ex-­‐Directors	
  and	
  ex-­‐Director-­‐Generals	
  entered	  a	  regional	
  
bank	
  or	
  a	
  regional	
  bank	
  II,	  many	  of	
  which	  were	  already	
  experiencing	
  problems.	
  Regarding	
  the	
  regional	
  banks,	  lower	
  growth	
  rates	  of	
  loans	
  were	  observed	
  in	
  all	
  cases,	
  and	
  lower	
  loan/deposit	
  ratios	
  or	
  higher	
  capital/asset	
  ratios	
  were	  observed	
  in	
  most.	
  These	
  findings	
  suggest	
  that	  the	
  link	  between	
  the	
  amakudari	
  relationship	
  and	  the	
  bubble	  economy	
  in	
  the	
  late	  1980s	
  was	  not	  as	
  straightforwardly	
  negative	
  as	
  is	
  generally	
  considered.	
  
	
  
JEL	
  Classification:	
  N25;	
  N35;	
  N45;	  	  	  Keywords:	
  financial	
  history;	
  human	
  capital;	
  regional	
  bank	  *	
  Associate	
  professor	
  of	
  Japanese	
  Economic	
  History,	
  Department	
  of	
  Economics	  -­‐	  	
  E-­‐mail:	
  e-­‐hotori@ynu.ac.jp;	
  Tel:	
  +81	  45	  339	
  3582.	
  The	
  views	
  in	
  this	
  paper	
  are	
  solely	
  the	  responsibility	
  of	
  the	
  authors	  and	
  should	  not	  be	
  interpreted	
  as	
  reflecting	
  the	
  views	
  of	
  the	
  EABH	  or	
  of	
  any	  other	  person	
  associated	
  with	  the	
  EABH.	
  The	
  material	
  presented	
  in	
  eabh	  Papers	
  is	
  property	
  of	
  the	
  author(s)	
  and	
  should	
  be	
  quoted	
  as	
  such.	
  1.  Introduction   Until the creation of the Financial Services Agency (FSA) in 1998, human capital was one of
the key elements in Japanese banking supervision. The supervisory system basically relied on
the supervisor’s discretion, rather than a rigid set of rules. Therefore, the supervisor’s
competence was considered to affect the performance of (on-site) bank examinations. However,despite its importance, previous studies in relation to Japanese financial elites have mainly
covered the Minister of Finance and the Directors of important Bureaus at the Ministry of
Finance (MOF), or the Governor of the Bank of Japan (BOJ).1 The role of Japanese financial
elites in banking supervision has not yet been explored.
Several European studies have analyzed financial elites. 2 Cassis (1991) examined thefinancial elites of three European centers – London, Paris and Berlin – from a comparative
perspective, and traced the transition of economic power and social status (wealth andeducation) of financial elites in these three cities. Cassis and Tanner (1992) analyzed thefinancial elites in Switzerland, and identified trends in the social origins and education of Swissbanking elites. Similarly, Berghoff and Köhler (2007) studied the educational profile of Germanbanking elites from 1906 to 2001. Although these studies did not include an analysis of theJapanese case, nor of the financial elites’ role in banking supervision, the research method andframework that were used are applicable to this study.3
The author of this paper once traced the history of Japanese banking supervision, mainly
focusing on its institutional aspect.4 Hence, this paper focuses on the human capital aspect ofbanking supervision, targeting the Director of the Financial Inspection Department at the MOF
as well as the Director-General of the Bank Examination Department at the BOJ. The long-term
elements of the human capital aspect – education, tenure and career paths including ‘amakudari’(entering a private institution after leaving office) – are examined quantitatively, and thus twocontroversial issues in relation to the financial history of Japan are considered.
First, the consequences of the occupation reform encouraged by the United States (US) areexamined. As is well known, the Japanese banking supervisory system was drastically reformed
under US Occupation (1945–1952). 5 However, the contents of this reform, especially theeffects following the end of occupation, have remained an unexplored research theme.
An earlier version of this paper was presented at the Economic History Society Annual Conference heldat the University of Wolverhampton on 29th of March, 2015. I am grateful to all participants for theirvaluable suggestions. In particular, I thank Leslie Hannah, Paolo di Martino, Catherine Schenk andMikael Wendschlag for their constructive discussions. Of course, I am solely responsible for all remaining
errors. This research was financially supported by JSPS KAKENHI (Grants-in-Aid for Scientific
Research) Grant Number 26380422.
1
Hata (2001) and Yoshino (1976).
2
For the US case, Temin (1997) found that the composition of the business elite appeared to be the same
throughout the 20th century.
3
Mukai (2000) detailed the number, career path, tenure, and political link of the elites in the MOF,
although the Directors of the Financial Inspection Department were not included in the analysis. The
analysis was limited to the period 1914–1945.
4
Hotori (2011).
5
Hotori (2005).
-1-

Second, the main cause of the ineffective banking supervision in the late 1980s, which led tothe bubble economy in Japan, is examined. A conventional (journalistic) view suggested that
there was typically an intimate connection (i.e., corruption) between an examiner and a bank.6
In relation to this discussion, Horiuchi and Shimizu (2001) compared the performance ofregional banks that accepted post-retirement officers and those that did not. Covering theregional bank category and the regional bank II category,7 they examined more than 120
regional banks and approximately 200 amakudari officers during the period of 1977–1992.
Their empirical results suggested that the amakudari relationship (implicit collusion) enabledbanks to expand their risk-taking activities. Overall, Horiuchi and Shimizu (2001) provided
academic support for the journalistic view. However, a different view was illustrated by Saito(1996), who pointed out that bank examiners actually had precise information regarding theexamined bank in several cases, and that supervisory officers did not actively use that
information given the optimistic economic/business prospects harbored by the government.8
The latter view indicated that the problem was caused by ineffective supervision rather than by
implicit collusion.
With the aforementioned research questions in mind, this paper mainly focuses on the
amakudari relationship between an ex-Director/ex-Director-General and a regional bank. In
particular,theperformance

of

the

regional

banks

that

acceptedanex-Director/ex-Director-General was analyzed quantitatively and compared with average data
for all regional banks. Three cases are analyzed in detail.9
The rest of this paper is organized as follows. Section 2 outlines the career path of all the
Directors (49 in total) of the Financial Inspection Department at the MOF from 1927 to 1998.
Section 3 outlines the career path of all the Director-Generals (26 in total) of the Bank
Examination Department at the BOJ from 1928 to 1981. For the purpose of reconsidering thelink between the amakudari relationship and regional bank management, Section 4 analyzes theperformance of three regional banks (Jouyo Bank, Oita Bank and Nishi-Nippon Bank) based on
the following financial indexes – the loan/deposit ratio, the capital/asset ratio, the return on
assets and the growth rate of loans. Section 5 offers several concluding remarks.

6

According to the newspaper The Nikkei (Nihon Keizai Shinbun), two bank examiners from the MOF
were arrested for bribery and corruption on 26 January 1998.
7
The origin of a regional bank II was a mutual loan association. In June 1988, the Financial System
Research Committee under the MOF submitted a report proposing the modernization of the mutual loan
association system. Thus, most of the mutual loan associations were transformed into regional banks II in
1989. The banking activity and bank customers were initially quite different between the regional banks
and the regional banks II.
8
Saito (1996) pp. 117–125.
9This paper excluded the regional bank II category for more precise comparisons, since the regionalbanks II generally adopted riskier strategies than the regional banks during the bubble economy period.

-2-2.  Career  path  of  the  Director  of  the  Financial  Inspection  Department  in  the  Ministry  of  Finance  This section covers all of the Directors (49 in total) of the Financial Inspection Department at
the MOF from 1927 to 1998.10 The period was divided into four terms: (1) 1927–1942, (2)1949–1965, (3) 1965–1981 and (4) 1981–1998.11 The Directors’ education, tenure and career
paths (including amakudari) were identified quantitatively. The analysis is based on the Official
Gazette of Japan, the records of the MOF and biographies (including autobiographies), as well
as social registers of Japan published by a private company.
(1)  Education  Table 1 provides a summary of the academic backgrounds of the Directors of the Financial
Inspection Department at the MOF. Except for term 2, almost all of the Directors werecategorized as elite men from the faculty of law at The University of Tokyo. Directors fromother faculties at other universities, or even at The University of Tokyo, were quite rare. Lack ofdiversity was a feature of the Directors’ academic backgrounds.12
Table 1. Academic backgrounds of the Directors of the Financial Inspection Department
University
Faculty (Degree)

Tokyo
Law

Economics

ScienceTohoku

Kyoto

Hitotsubashi

Law

Economics

Commerce

Term1 (1927-42)

11

0

0

0

1

0

Term2 (1949-65)

4

3

0

1

0

1

Term3 (1965-81)

11

1

1

1

0

0

Term4 (1981-98)

11

2

0

0

1

0

37

6

1

2

2

1

Total

Sources: Ministry of Finance (1973). Jinji Koshin-jo (1979-93, 2001). Nichigai Associates (2001, 2004).

However, a different practice of personnel appointment was adopted in term 2. Under the US
Occupation, conventional banking supervision in Japan was drastically reformed toward theAmerican-style supervisory system. Greater importance was attached to specialized knowledgeof economics, and thus an elite from the faculty of economics was appointed to the Director
position. For example, a graduate from the faculty of economics of The University of Tokyo,
Kikuichiro Yamamoto, was appointed Director for the period 1950–1953. During term 2, thisnew practice appeared to become established, given that even a faculty of commerce graduate
10

The Financial Inspection Department was originally created as a division under the Banking Bureau in
May 1927. Following its suspension in 1942 due to the Second World War, the supervisory division was
reorganized into the department in 1948. Banking supervision officially recommenced in 1949.
11
More precisely, term 1 covers May 1927– November 1942, term 2 covers June 1949– June 1965, term
3 covers July 1965– June 1981, and term 4 covers July 1981– July 1998.
12
Directors who majored in law were commonly seen as favorable, given that banking supervision
primarily involved an inspection of whether a bank had complied with the Banking Act and theadministrative guidelines of the MOF.

-3-

from Hitotsubashi University, Seiichi Makino, was appointed Director for the period 1963–1965.
Thus a change of academic backgrounds was seen until 1965. However, the new practice wasthen quietly abolished. Throughout term 3, only three of the 14 Directors were not from thefaculty of law at The University of Tokyo. Thus, the change introduced in term 2 haddisappeared by the end of term 3, and was never reversed.
(2)  Career  paths  a) Amakudari
Table 2 provides a summary of the careers of ex-Directors of the Financial Inspection
Department after leaving office. The MOF commonly arranged a good posting, such as board
membership of a public financial institution, for senior officers upon leaving office. However,these people were expected to retire from these positions after 4–6 years and find a second (real)place to work. This made it difficult to determine what the main career was for an ex-Director.
In this study, the main career was determined based on the second (or third) place of work, therank of the position and the time spent in the position.
In term 1, five of the 12 ex-Directors entered special (governmental) banks – the BOJ, theBank of Taiwan or the Bank of Joseon – after leaving office. The rest of the ex-Directors entereda national (war) policy company such as the South Manchuria Railway. After the war, several
ex-Directors moved to public financial institutions/associations as presidents for the purpose of
supporting small/medium-sized companies. The wartime economy appeared to affect the placeof work after leaving office during this term.
In term 2, it is noteworthy that only one ex-Director went on to work for a private bank.
Three of the nine ex-Directors worked for private financial institutions (not banks) – Yamaichi
Securities Investment Trust Company, Fuji Fire and Marine Insurance Company or Nihon
Housing Loan Company (‘Jusen’ – similar to the British Building Society) – as the president.
In term 3, a clear pattern was observed whereby seven of the 14 ex-Directors entered privatebanks. Five worked for regional banks or regional banks II – Senshu Bank, Nishinihon Bank,
Saitama Bank,13 Daisan Bank or Jouyo Bank – as the president or the vice-president, and theother two worked for city banks – Kyowa Bank14 or Nippon Credit Bank – as president or
vice-president. In addition, three ex-Directors entered the financial sector – Nihon Housing
Finance (Jusen), Nippon Cash Service or Shinkin Central Bank (similar to the British Credit
Union) – as president. In total, ten ex-Directors occupied top executive positions in financial
institutions during the bubble economy period.

13

Saitama Bank was converted into a city bank in 1969. However, it remained relatively similar to aregional bank such as Yokohama Bank.
14
Kunio Otani was vice-president of Kyowa Bank in 1982–1990. Otani entered a regional bank II,
Tokuyo Bank, as the president in 1990 in order to reform the bank’s kinship-based management structure.
However, the bank went bankrupt in 1997.

-4-

In term 4, a similar pattern was observed. Five of the 13 ex-Directors15 entered private banks,and most of them worked for regional banks II – Higashinihon Bank, Sagakyoei Bank orTomato Bank – as their president. However, it is noteworthy that ten Directors of the Financial
Inspection Department during the period 1983–1993 did not enter a private bank, presumably inorder to avoid criticism by the media.16 Instead, five ex-Directors entered the financial sector –Osaka Exchange, Japan Earthquake Reinsurance, Yamatane Securities, Japan Securities
Depository Center or Rokinren Bank (the central bank for workers’ credit unions) – aspresident.
Table 2. Main career of the ex-Directors of the Financial Inspection Department after leaving
officeFinancial sector
City
bank

Regionalbank

Regionalbank IISpecial/Foreignbank

Insurance/
securities/
financecompany

Non-financial sector

Non-businesssectorReal-estatecompany

Manufactur
-ing

Diet
memberOther

Term1 (1927-42)

2

0

1

5

0

1

2

0

1

Term2 (1949-65)

1

0

0

1

3

1

2

0

1

Term3 (1965-81)

2

2

3

0

3

0

2

2

0

Term4 (1981-98)

1

0

3

1

5

2

0

0

1

6

2

7

7

11

4

6

2

3

Total

Sources: Ministry of Finance (1973). Jinji Koshin-jo (1979-93, 2001-09). Nichigai Associates (2001,
2004).
Notes: Generally, a retired high officer changes a place (company) for work twice or more times. Main
career is based on the rank of the position and the term in the position. Hatakeyama is notincluded in the Table since he died just after leaving office.

It is evident that most of the ex-Directors of the Financial Inspection Department entered thefinancial sector as the top executive of the institution they joined during term 3 and term 4(1965–1998). The media severely criticized the amakudari relationship between the financial
industry and the MOF as a typical kind of moral hazard. However, it is noteworthy that most of
the ex-Directors entered a regional bank II in order to modernize the conventional kinship-based
management structure.17 Prior to accepting an ex-Director from the MOF, several regionalbanks II had already suffered critical bad loan problems due to their kinship-based management
structure. Moreover, as is well known, serious problems occurred among the long-term credit
banks (a part of the city banks), the housing finance institutions (Jusen) and the agricultural
cooperatives.18 Eventually, one ex-Director joined a long-term credit bank and two joined
housing finance institutions during the postwar period; therefore, the actual number of
15

There were 14 ex-Directors during this period. However, Shigeru Hatakeyama died in 1995 just after
retiring from the position of Administrative Vice-Minister of the Defense Agency.
16
There was one exceptional case – Yuichi Ezawa joined UBS Trust & Banking as president of their
Japanese office.
17
Unlike the regional banks II, regional banks did not suffer critical bad loan problems.
18
Ishii (2014) pp. 277–284.

-5-

ex-Directors joining these institutions is much smaller than was generally believed. In addition,
Hiroshi Kubota joined the Nippon Credit Bank in 1993, albeit quite reluctantly.19 Therefore, it
seems that the moral hazard criticism is inappropriate as long as the amakudari relationship islimited to the ex-Directors of the Financial Inspection Department in the MOF.
b) Career before/after being appointed Director
The Japanese bureaucracy has adopted the internal promotion system. The career path isbasically similar for all elites (‘Kyaria Kanryo’),20 although this does not apply in all cases. The
ultimate goal of an ambitious elite is to become Administrative Vice-Minister of a dominant
Ministry such as the MOF. However, the promotion race is highly competitive, and hence mostof the elites aim to become Director-General of an important Bureau. The age at which an elite
official was appointed to the position of Director of the Financial Inspection Department at the
MOF was commonly 47–50. Table 3 and Table 4 provide a summary of positions held
before/after becoming the Director of the Financial Inspection Department. In addition, Table 5
provides a summary of the highest position attained by selected ex-Directors before leaving
office.
In term 1, the career path appears to be quite straightforward. Four of the 12 ex-Directors
were from the Ordinary Bank Division, and another four were from other divisions at the MOF.
After leaving the position of Director of the Financial Inspection Department, five of the 12
were promoted to Director-General of the Banking Bureau or other Bureaus at the MOF. In
contrast, just two ex-Directors left office immediately after leaving the position.
In term 2, the career path changed noticeably from that during the prewar period. As a resultof the US Occupation and reform, the previous career path was abolished, and a variety ofcareer tracks were prepared for elites during this period. Two of the nine ex-Directors were theheads of a regional Customs Department under the MOF, and another two were the
Director-Generals of a local Finance Bureau under the MOF. The local Finance Bureaus werealso in charge of the supervision of the small local banks, i.e., Shinkin Banks (Credit Unions). It
is reasonable to assume that these career paths provided a training ground for promotion to
Director of the Financial Inspection Department. No one was promoted to Director-General of
the Banking Bureau after reaching the position of Director, and just one ex-Director was
promoted to Director-General of the Customs and Tariff Bureau. Seven ex-Directors weretransferred to various positions including the Cabinet Secretariat and the head of the economy in
the Imperial Household Agency. Later, three ex-Directors were promoted to Director-General ofother Bureaus in the MOF.
In term 3, we can observe a new pattern in the career path. Six of the 14 ex-Directors were
19

Editorial Committee of In Memory of Kubota Hiroshi (2014) p. 148.
In Japan, an elite is distinguished from an officer at the stage of the recruitment examination. A
graduate from The University of Tokyo is implicitly likely to be accepted.
20-6-Director-Generals of a local Finance Bureau and another four were the heads of a regional
Customs Department. Experience in a local Finance Bureau appeared to be necessary prior tobeing appointed Director of the Financial Inspection Department. After leaving the position, two
ex-Directors were promoted to Director-General of the Printing Bureau in the MOF and four
were promoted to Deputy Director-General in the MOF. Eventually, two ex-Directors were
promoted to Commissioner in the National Tax Agency or Administrative Vice-Minister in the
National Land Agency and four were promoted to Director-General of the Banking (orFinancial) Bureau in the MOF. The career path appeared to be the reverse of that during the
prewar period. In addition, two ex-Directors were elected to the Diet after leaving office and
one was appointed Director-General of the Defense Agency.
Table 3. Position immediately before being appointed Director of the Financial Inspection
Department
Head of a
Regional
Customs

Head of a
Regional
Taxation
BureauDirector of
the Ordinary
Bank Division

DirectorGeneral of a
Local Finance
BureauDirector ofotherdivisions

Other

Total

Term1 (1927-42)

1

0

4

0

4

3

12

Term2 (1949-65)

2

1

0

2

2

2

9

Term3 (1965-81)

4

1

0

6

0

3

14

Term4 (1981-98)

4

1

0

4

1

4

14

11

3

4

12

7

12

49

Total

Sources: Government Printing Bureau (1927-98).

Table 4. Position immediately after leaving the position of Director of the Financial Inspection
Department
Director-Gene
ral of a
BureauDeputyDirector-Gene
ral of a
Bureau

5

0

1

Term1
(1927-42)
Term2(1949-65)
Term3(1965-81)
Term4(1981-98)
Total

Head oftheTokyo
Taxation
BureauHead of a
Regional
Customs

Director-Gene
ral of a Local
Finance
BureauCouncilorof theMinister’s
Secretariat

Other

Leave
office

Total

0

1

1

0

3

2

12

1

0

0

0

1

5

1

9

2

3

1

0

1

4

3

0

14

3

5

1

0

0

4

1

0

14

11

9

2

1

2

9

12

3

49

Sources: See Table 3.

In term 4, a similar pattern to that in term 3 is clearly observed. Four of the 14 ex-Directors
were the Director-Generals of a local Finance Bureau and another four were the head of aregional Customs Department. After leaving the position, three ex-Directors were promoted to
Director-General of the Printing Bureau or the Mint in the MOF and three were promoted to-7-

Deputy Director-General in the MOF.21 Eventually, six ex-Directors became Administrative
Vice-Minister in the National Land Agency, the Defense Agency or the Environment Agency. In
addition, three ex-Directors were promoted to Director-General of the Financial (orSecurities/International Finance) Bureau in the MOF. It was evident that the career paths of theex-Directors in term 4 were more successful in terms of promotion compared with other terms.
However, it is noteworthy that no one was promoted to Administrative Vice-Minister ofFinance throughout the entire period. Therefore, it is reasonable to consider that the position of
Director of the Financial Inspection Department in the MOF was not sufficiently attractive for
ambitious elites.22 The motivation for an elite to be assigned to this position was probably not
as great as that for other first-class positions. After leaving office, the modest motivation of an
ex-Director might have oriented the bank’s management toward a more conservative rather thana more aggressive approach.
Table 5. Highest position held by selected ex-Directors before leaving office
Administrative
Vice Ministerof the Finance

Administrative
Vice Minister ofother than the
Ministry of
Finance

Director-Gene
ral of the
Banking
BureauDirector-Gene
ral of the
Financial
BureauDirector-Gene
ral of otherBureaus in the
Ministry of
Finance

Director-Generalof a Bureau inother than the
Ministry of
Finance

Term1 (1927-42)

0

0

3

2

3

0

Term2 (1949-65)

0

0

1

0

6

1

Term3 (1965-81)

0

2

3

2

5

0

Term4 (1981-98)

0

6

0

1

5

1

Sources: Government Printing Bureau (1928-2002).
Notes: The selected positions are limited to the high ranks. The figure is smaller than the total number ineach term since several ex-Directors left office before reaching a high rank position. The figure
includes double counting since several successful officers were assigned to the multiple high rank
positions in series.

(3)  Tenure  Table 6 provides a summary of the period of tenure as Director of the Financial Inspection
Department in the MOF.
It is noteworthy that the period of tenure in term 2 was relatively longer than in other terms.
The US Occupation and reform extended the term of tenure (to almost two years – still shorter
than other countries), which was an attempt to transform the position to more of an expert
position rather than a generalist position.
In term 3, the period of tenure declined to approximately one year, and the standard deviation
was the lowest of all the terms. The same pattern can be seen in term 4. The shorter period oftenure in the position suggests that the Director position was more of a generalist position from21

In addition, one ex-head was promoted to the equivalent position in the Ministry of Defense.
Although not the best option, the position was supposed to be quite attractive for most elites because it
was possible for an ex-Director to be promoted to Administrative Vice-Minister of departments other thanthe MOF.
22-8-

1965 until the creation of the FSA.
Table 6. Period of tenure as Director of the Financial Inspection Department(month)Term1 (1927-42)
Term2 (1949-65)
Term3 (1965-81)
Term4 (1981-98)
Throughout terms

Mean
15.7
22.6
13.4
14.4
15.8

Max.

Min.
24
40
20
24
40

Median
6
9
9
10
6

S.D.
19
23
13
12
13

6.37
9.72
3.22
5.05
6.81

Sources: See Table 3.

3.  Career  path  of  the  Director-­General  of  the  Bank  Examination  Department  in  the  Bank  of  Japan  This section covers all of the Director-Generals (26 in total) of the Bank Examination
Department23 in the BOJ from 1928 to 1981.24 Similar to the analysis of the MOF in theprevious section, the period was divided into three terms: (1) 1928–44, (2) 1944–62 and (3)1962–81. 25 The education, tenure and career paths (including amakudari) of the
Director-Generals were examined quantitatively. The analysis was based on the records of the
BOJ and biographies (including autobiographies), as well as social registers of Japan publishedby a private company.
(1)  Education

Table 7 provides a summary of the academic backgrounds of the Director-Generals of the Bank
Examination Department in the BOJ.
Table 7. Academic backgrounds of the Director-Generals of the Bank Examination Department
University
Faculty (Degree)
Term1 (1928-44)
Term2 (1944-62)
Term3 (1962-81)
Total

Tokyo
Law
4
2
3
9

Tokyo
Economics
1
4
5
10

Kyoto
Economics
0
1
0
1

Hitotsubashi
Commerce
04
04

NagasakiCommerce2002

Sources: Bank of Japan (1982). Jinji Koshin-jo (1951-93, 2001). Nichigai Associates (2001, 2004).

As with the Directors of the Financial Inspection Department in the MOF, most of the23

The Bank Examination Department was originally created as a division in the BOJ in May 1928. With
the enactment of the BOJ Act of 1942, the division was reorganized into the department.
24
Precisely, there were 35 Director-Generals over the period. In nine cases, the Executive Directors
temporarily held the position concurrently to avoid a vacancy occurring. Those nine cases were excluded
from the analysis.
25
More precisely, term 1 covers May 1928– July 1944, term 2 covers August 1944– April 1962, and term
3 covers May 1962– June 1981.

-9-

Director-Generals were from The University of Tokyo. In term 2, specialized knowledge of
economics and commerce was considered necessary for the position as a result of the US
Occupation, and economics graduates had been in the majority since term 2, unlike with the
MOF. Specializing in economics provided an advantage in undertaking bank examinations. The
focus of on-site examinations conducted by the BOJ was mainly on financial ratios, rather thanon compliance with the law or its guidelines.
In 1987, the supervisory practices of the BOJ shifted to checking the risk management
systems of commercial banks to identify excessive risk-taking during the bubble economy
period.26 However, the MOF continued to perform its conventional supervisory role, and thus
was slow to recognize excessive risk-taking.27(2)  Career  pathsa) Amakudari
Table 8 provides a summary of the careers of the ex-Director-Generals of the Bank Examination
Department of the BOJ upon leaving office. As was the case with the MOF, the BOJ commonly
arranged a good posting such as board membership in public institutions for senior bankers after
leaving office. However, the relatively strong connections between central banks and privatecompanies (or banks) made it easier for a departing senior banker to join a private company orbank without the need for arrangements to be made by the BOJ.
Table 8. Main career of the ex-Director-Generals of the Bank Examination Department after
leaving officeFinancial sector
City
bank

Regionalbank

Regionalbank IISpecialbank

Insurance/
securities
company

Non-financial sector

Non-businesssectorServicescompany

Manufactur
-ing

Diet
memberOther

Term1 (1928-44)

0

2

0

1

0

1

1

1

1

Term2 (1944-62)

3

1

0

2

1

2

1

0

1

Term3 (1962-81)

0

1

1

1

1

3

1

0

0

3

4

1

4

2

6

3

1

2

Total

Sources: See Table 7.

In term 1, two of the seven ex-Director-Generals joined regional banks – Yokohama Bank andAshikaga Bank – as president, while another two joined a national (war) policy company – theSouth Manchuria Railway and the War Finance Company. The rest of the ex-Director-Generals
were promoted to a higher position within the BOJ, that is, Governor or Executive Director. In
particular, Hisato Ichimada became the Minister of Finance following eight years as Governor
26

Kumakura (2008) pp. 110–119.
Okazaki and Hoshi (2002) pp. 351–354. The supervisory power was transferred from the MOF to the
FSA in 1998. It was not until 1999 that the FSA formally adopted the supervisory concept of checking therisk management systems of commercial banks.
27- 10 -

of the Bank. As with the MOF, the wartime economy appeared to affect the place of work after
leaving office during this term.
In term 2, seven of the 11 ex-Director-Generals entered the financial sector. Of these, threejoined city banks – Tokyo Bank (two) and Kyowa Bank – as president or executive director.
In term 3, half of the ex-Director-Generals entered the nonfinancial sector as presidents ofprivate companies – Nagoya Railroad, Japan Information Processing Service, Kenwood
Corporation and Keiyo Resorts Development. None of the ex-Director-Generals joined a citybank. Instead, the rest of the ex-Director-Generals joined a regional bank, a regional bank II or asecurities company as president.28 An amakudari preference for the nonfinancial sector was
identified over this period.
Throughout the entire period, four ex-Director-Generals (out of 26) joined a regional bankand just one joined a regional bank II, while three joined a city bank. It is noteworthy that theactual number of amakudari bankers was much less than is generally thought. More importantly,
during the bubble economy period, just two ex-Director-Generals were in charge of banks –Oita Bank and Hyogo Bank.29 Similar to the case of the MOF in the previous section, the moral
hazard criticism is not appropriate here as long as the amakudari relationship is limited to theex-Director-Generals of the Bank Examination Department in the BOJ.
b) After being appointed Director-General
Table 9 provides a summary of the highest position held by the ex-Director-Generals of the
Bank Examination Department in the BOJ before leaving office. Two ex-Director-Generals
were promoted to Governor of the BOJ. In addition, one ex-Director-General was promoted to
Deputy Governor and five were promoted to Executive Director.
It appears that the position of ex-Director-General of the Bank Examination Department in
the BOJ was relatively more successful than the equivalent position in the MOF. The possibilityof being promoted to Governor of the BOJ must have provided considerable motivation for
ambitious senior bankers at the BOJ. The personnel practices and the promotion system at the
BOJ appear to have been quite different from those of the Financial Inspection Department in
the MOF.
Table 9. Highest position held by ex-Director-Generals before leaving office
DeputyGovernor

GovernorTerm1 (1928-44)
Term2 (1944-62)
Term3 (1962-81)

200

Executive
Director
01
028

DirectorGeneral

Auditor
1
3
1

0
1
2

4
6
5

An exception was Kageaki Akashi, who joined the Shoko Chukin Bank (the government-affiliatedfinancial institution mainly concerned with small business financing) as the Executive Director in 1967.
29
Due to reckless lending overseen by an internally promoted president prior to the arrival of a series of
amakudari presidents, the Hyogo Bank failed in 1995.

- 11 -

Total

2

1

5

3

15

Sources: See Table 7.

(3)  Tenure  Table 10 provides a summary of the periods of tenure as Director-General of the Bank
Examination Department in the BOJ. On average, the period of tenure as Director-General wasapproximately two years, which was eight months longer than the average period of tenure in
the equivalent position in the MOF. Hisato Ichimada, who later became the 18th Governor of
the BOJ, as well as the Minister of Finance, held the position of Director-General of the Bank
Examination Department for more than five years (1939–1944).
The period of tenure was relatively shorter in term 2 than in other terms, which was the
opposite trend to that in the MOF as a result of the US Occupation policy. However, thepersonnel practice changed to a specialty-oriented system in term 3. Kageaki Akashi, whose
father Teruo Akashi was the president of the Dai-ichi (First) Bank, held the position for five
years (1962–1967). Compared with the situation at the MOF, the Director-General had enoughtime to gain sufficient experience as a specialist to direct bank examinations expertly, thanks to
the relatively longer period of tenure.
Table 10. Period of tenure as Director-General of the Bank Examination Department(month)Term1 (1928-44)
Term2 (1944-62)
Term3 (1962-81)
Throughout terms

Mean
27.9
17.8
28.4
23.8

Max.

Min.
63
33
60
63

Sources: Bank of Japan (1982).

- 12 -Median
6
8
13
6

22
17
23
18

S.D.
20.32
6.31
15.15
14.81

4.   Performance   of   regional   banks   with   amakudari   presidents   during   the  bubble  economy  period  From the aforementioned analysis, it is evident that the general image of the amakudari
relationship (implicit collusion) should be reconsidered carefully. We should study several cases
to examine whether or not the amakudari relationship worsened the management of a regionalbank. This section quantitatively analyzes the performance of regional banks with amakudaripresidents from the MOF as well as the BOJ during the bubble economy period and beyond(1985–1999). We examine the following three cases – Jouyo Bank, Oita Bank and Nishi-Nippon
Bank. These three cases are suitable for analysis because amakudari bankers were in the top
management positions of these banks during the period in question. The same financial indexes
as those used by Horiuchi and Shimizu (2001) are selected.30 The analysis is based on theannual financial reports of each bank as well as interviews with the ex-president of eachregional bank.
Table 11 provides the mean values of the financial indexes in 1985–1999 for the threeselected regional banks, all regional banks and all regional banks II. Based on the financial data,
it is evident that the three selected regional banks adopted relatively conservative management.
Basically, lower loan/deposit ratios and growth rates of loans, as well as higher capital/asset
ratios compared with all regional banks, were identified. Nevertheless, the return on assets washigher than average for Oita Bank and only slightly lower for Jouyo Bank and Nishi-Nippon
Bank.
Table 11. Mean values of the financial indexes of the regional banks, 1985–1999

All regional banks
Jouyo Bank
Oita Bank
Nishi-Nippon BankAll regional banks 2

Loan/Deposit

Capital/Asset

Growth rate ofLoan

0.77480.74880.72940.84500.83390.03690.03980.03230.0376
0.03100.0586
0.05390.05300.05370.0431Return on
Assets0.00160.00130.00180.0015-0.0002

Sources: Bank of Japan (1985-99). Jouyo Bank (1985-99). Oita Bank (1985-99). Nishi-Nippon Bank
(1985-99).

The first case, Jouyo Bank, is headquartered in Mito, which is located near Tokyo. Hence, thebank had been under the influence of the land price boom in the Tokyo area during the bubble
economy period. Itaru Ishikawa, who was the Director of the Financial Inspection Departmentin the MOF in 1979–1980, joined Jouyo Bank in 1985 after leaving office. Ishikawa was thevice-president of the bank in 1986–1988, and president in 1988–1993. Then, Toranosuke
30

The loan/deposit ratio was included in our analysis because this financial index is one of the mostcommonly used measures in the analysis of bank management.

- 13 -

Nishino was promoted to president in 1993, and Ishikawa was the chairman of the board from1993 to 1999.
During this period, Jouyo Bank continued to practice conservative management, as reflectedby their relatively lower loan/deposit ratios and higher capital/asset ratios (Figures 1 and 2).
Although Jouyo Bank had increased its lending in response to the expansion of the economy
from 1987, it recognized the imminent collapse of the bubble early in 1990. Under Ishikawa’s
management, the executive director, Nishino, directed the general manager and the branchmanagers not to increase lending. Eventually, Jouyo Bank was able to rapidly reduce its lending
from 1991 onwards.31
The second case, Oita Bank, is headquartered in Oita in the Kyushu area. During the bubble
economy period, the Law for Development of Comprehensive Resort Areas (Resort Law) of
1987 encouraged local governments to construct recreation facilities. Every regional bank was
required to accommodate a developer and/or a recreation company with a large loan. In the
Kyushu area in particular, local governments had strong incentives to develop resort areas. The
result was that most of the newly constructed recreation facilities proved to be unsuccessful inthe 1990s.32
Nevertheless, Oita Bank remained prudent during the bubble economy period. Tomochika
Obi, who was the Director-General of the Bank Examination Department in the BOJ in 1970–
1971, joined Oita Bank in 1971 after leaving office. Obi was the executive director of the bankin 1971–1973 and president in 1973–1984. Then, Shozo Ando, who also joined Oita Bank fromthe BOJ, was promoted to president in 1984 and Obi was the chairman of the board in 1984–
1988. Ando was president until 1998 and then the chairman of the board until 2005. Under bothof these amakudari presidents from the BOJ, Oita Bank declined to lend to any projects relating
to the Resort Law, even when the development was promoted by the local government, with one
exception: The bank agreed to lend to Harmonyland, a Sanrio character park featuring popularcharacters such as Hello Kitty, which has proved to be profitable.33 The bank’s relatively lower
loan/deposit ratios and growth rates of loans reflected this conservative approach (Figures 1 and
3). It is also noteworthy that the bank’s return on assets has been relatively high since 1995
(Figure 4), and the bank maintained relatively high profitability throughout the 1990s. The bankexamination undertaken by the BOJ checks the financial indexes of a bank, primarily focusing
on profitability. Hence, the conservative and profitable management of Oita Bank under the two
amakudari presidents from the BOJ appeared to be in line with BOJ supervisory principles.
The third case, Nishi-Nippon Bank, is headquartered in Fukuoka in the Kyushu area.
Nishi-Nippon Bank was originally a mutual loan association, and thus the main customer of thebank was related to the distribution industry. Tatsuta Goto, who was the Director of the31

Study Group of Regional Banking History (2006) pp. 31–35.
Two huge bankruptcies occurred in the Kyushu area following the collapse of the bubble economy –the failure of Miyazaki Seagaia Resort in Miyazaki City in 2001 and the failure of the Huis Ten Boschtheme park in Sasebo City (Nagasaki Prefecture) in 2003.
33
Study Group of Regional Banking History (2012) pp. 19–20.
32- 14 -

Financial Inspection Department in the MOF in 1971–1972, joined Nishi-Nippon Bank in 1984
after leaving office and was president from 1984 until 1995. Then, Seiji Koga was promoted topresident in 1995 and Goto was the chairman of the board in 1995–2000. During the same
period, another amakudari executive from the MOF, Tsuneo Shindo, was the vice-president.
During this period, Nishi-Nippon Bank remained committed to its original business; that is, tomaintain a high capital adequacy ratio and to serve long-term local customers. Thus, the bankwas not involved in the development projects relating to the Resort Law.34 Indeed, the failure of
the long-established local company that operated more than 130 supermarkets, Kotobukiya,
caused large losses for Nishi-Nippon Bank in 2001. However, these losses were still covered by
the bank’s internal reserves.35 The relatively higher capital/asset ratios and lower growth rates
of loans reflected the origin-based management of the bank (Figures 2 and 3).
In summary, we did not identify any evidence of bad management in the regional banks
caused by the amakudari relationship (implicit collusion). Rather, the amakudari presidents who
had been the Director of the Financial Inspection Department at the MOF or the
Director-General of the Bank Examination Department at the BOJ appeared to undertake
relatively conservative management.
Bad performance was indeed observed in several cases where a regional bank II accepted an
amakudari president during the bubble economy period and beyond (1985–1999), and overall,
the performance of the regional banks II was much worse on average than that of the regionalbanks (Table 11). No link was evident between bad performance of a bank and an amakudaripresident who had been the Director of the Financial Inspection Department in the MOF or the
Director-General of the Bank Examination Department in the BOJ. For example, Tokuyo City
Bank, headquartered in Sendai (Miyagi Prefecture), accepted an amakudari president, Kunio
Otani, in 1990. Otani, who was appointed Director of the Financial Inspection Department with
the MOF in 1970–1971, joined Kyowa Bank in 1977 and advanced to vice-president. The MOF
unofficially asked Otani to join Tokuyo City Bank, which had already experienced serious
management problems during the bubble economy period.
Another example illustrates the complicated story of the bad management of the regionalbanks II. Hyogo Bank, headquartered in Kobe (Hyogo Prefecture), accepted an amakudaripresident, Toyoteru Ito, in 1977. Ito, who was appointed Director-General of the Bank
Examination Department in the BOJ in 1976–1977, advanced to president in 1981. However,
the ex-president, Hiroo Hasegawa, retained overall power as the chairman of the board, having
been internally promoted from president in the time-honored manner.36 Hasegawa maintained
an aggressive management approach, lending to the real estate sector during the bubble
34

The largest regional bank in the Kyushu area, Fukuoka Bank, is also headquartered in Fukuoka. The
local government tended to approach Fukuoka Bank first when seeking funding for development projects.
35
Study Group of Regional Banking History (2013) pp. 44–49.
36
Hasegawa advanced to vice-president of Hyogo Bank in 1966, and was appointed president in 1970.
When Hasegawa resigned as president in 1981, he was already over 70. As a twenty-year younger
president, Ito might have experienced difficulty in persuading Hasegawa to initiate management reform.

- 15 -

economy period.37 Although Ito might have shared some responsibility for the bad management,
the main cause of the bank’s failure was the ex-president’s incorrect approach.

37

According to the annual reports of Hyogo Bank, the average yearly growth rate of loans in 1985–1990
was 0.16. This was twice that of all regional banks II (0.08 on average in 1985–1990).

- 16 -

Figure 1. Loan/deposit ratios of regional banks in 1985–1999
1.10
1.00
0.90
0.80
0.70
0.60
0.50

All regional

All regional 2

Jouyo

Oita

Nishi-Nippon

Sources: See Table 11.
Figure 2. Capital/asset ratios of regional banks in 1985–1999
0.06

0.05

0.04

0.03

0.02

0.01

All regional

All regional 2

Jouyo

Sources: See Table 11.
- 17 -

Oita

Nishi-Nippon

Figure 3. Yearly growth rates of loans by regional banks in 1985–1999
0.20

0.15

All regional

0.10

All regional 2
Jouyo
0.05

Oita
Nishi-Nippon

0.00

-0.05

Sources: See Table 11.

Figure 4. Return on assets of regional banks in 1985–1999
0.004

0.002

0.000
All regional-0.002All regional 2
Jouyo-0.004

Oita
Nishi-Nippon-0.006-0.008-0.010Sources: See Table 11.

- 18 -

5.  Concluding  remarks  This paper analyzed the long-term banking supervision career paths of Japanese financial elites
from the MOF and the BOJ. In addition, the performance of regional banks that accepted
amakudari presidents was examined quantitatively. The findings are summarized as follows.
First, as a result of the US Occupation reform in 1949, the supervisory approach, as well as
the personnel practices in relation to the Director of the Financial Inspection Department in the
MOF changed drastically. Expertise rather than a generalist approach came to be required, andthus graduates in economics began to be appointed to the position. The term of the appointment
was also extended to three years. However, the new practices were quickly reversed. Since 1965,
almost all of the high officers appointed to the position have been graduates from the faculty oflaw at The University of Tokyo. As for the Bank Examination Department at the BOJ, most of
the Director-Generals were also from The University of Tokyo. As a result of the US
Occupation, specialized knowledge of economics and commerce came to be a necessary
prerequisite for the position. Unlike the MOF, its majority of Director-Generals throughout the
postwar period have been economics graduates.
Second, it was found that none of the ex-Directors of the Financial Inspection Department at
the MOF was promoted to Administrative Vice-Minister of Finance. The position of Director isconsidered not sufficiently appealing for an ambitious high officer compared with otherfirst-class positions such as Director of the National Tax Division. 38 By contrast, eightex-Director-Generals of the Bank Examination Department at the BOJ were promoted toGovernor, Deputy Governor or Executive Director of the BOJ. Hence, it is reasonable to assume
that the position of Director-General was attractive for an ambitious senior banker at the BOJ.
Third, almost half (22/48) of the ex-Directors of the Financial Inspection Department with the
MOF entered the banking sector as the president or an executive director of a bank after leaving
office. Similarly, almost half (12/26) of the ex-Director-Generals of the Bank Examination
Department at the BOJ entered the banking sector as the president or an executive director of abank after leaving office. It is noteworthy that the majority of the ex-Directors from the MOF
and BOJ entered a regional bank or a regional bank II. As is well known, serious problems
occurred among city banks, housing finance institutions (Jusen) and agricultural cooperatives
following the bubble economy period. The ex-Directors or the ex-Director-Generals probably
avoided joining a city bank because they were able to access confidential information fromthese banks, including detailed financial statements. For example, Hiroshi Kubota, who was
appointed Director of the Financial Inspection Department in 1980–1981, entered a problematic
city bank (the Nippon Credit Bank) 39 quite reluctantly in 1993. In addition, Keiichiro
Niwayama, who was appointed Director of the Financial Inspection Department in 1965–1966,
38

The modest nature of the position might affect the conservativeness of bank management by anamakudari president after leaving office.
39
The Nippon Credit Bank was already in turmoil due to excessive risk-taking during the bubble
economy period. Eventually, the bank was brought under government control.

- 19 -

was asked to accept the position of president of a Jusen company (Nihon Housing Finance) for
its start-up in 1971 by Sanwa Bank for the purpose of obtaining a license from the MOF
smoothly.40 This appointment was not based on an amakudari relationship because the MOF
had no involvement in personnel decisions.
Fourth, as illustrated in Table 11, regional banks that accepted an ex-Director of the Financial
Inspection Department from the MOF or an ex-Director-General of the Bank Examination
Department from the BOJ operated in a more conservative manner, even during the bubble
economy period. A lower growth rate of loans was observed in all cases, and a lower
loan/deposit ratio or a higher capital/asset ratio was observed in most cases. These results
indicate that ex-Directors of the Financial Inspection Department from the MOF or
ex-Director-Generals of the Bank Examination Department from the BOJ were consistently
prudent in their management approach after leaving office. Even though relatively worse
performance was observed in the regional banks II, no significant link was identified betweenbank performance and amakudari appointments.
Therefore, the findings of this study suggest that the link between amakudari appointments
and the bubble economy in the late 1980s was not as straightforward as is generally considered.
Following the collapse of the bubble economy, the MOF, the BOJ and the bank examiners wereseverely criticized by the media, who insisted that there was an intimate connection (corruption)
between an examiner and a bank. Indeed, two bank examiners were arrested for bribery andcorruption in 1998. However, as illustrated in this study, the regional banks that accepted an
amakudari president appeared to maintain a relatively conservative management approach
during the bubble economy period.41 Nonetheless, the media, the public and even the judges
appeared to lose patience in the late 1990s.42 Eventually, the Financial Inspection Department
was separated from the MOF in 1998 and the newly created FSA was placed directly under the
Cabinet Office. The prosecutor’s power was enhanced, with the Superintending Prosecutor of
the Nagoya High Public Prosecutors Office being appointed as first Commissioner of the FSA.43
This transition of supervisory power indicated that there existed a political power game between
bureaucrats and politicians. The main cause of the extraordinary bad loan problem in the 1990s
appears to be an incorrect management approach by internally promoted presidents, as well as
the government’s economic expansionism (such as implementation of the Resort Law), rather
than the amakudari relationship. Hence, presidents’ career paths in the problem banks should beanalyzed quantitatively for further research.
40

Niwayama (2008) pp. 394–399.
The media considered several cases of bank failure to be the result of collusion. In fact, as illustrated inthis study, an ex-Director or an ex-Director-General reluctantly joined these banks, which were already infinancial difficulty due to excessive risk-taking during the bubble economy period.
42
Kobayashi (2014) pp. 14–18. For example, an ex-Director of the Financial Inspection Department,
Kubota, who worked for the Nippon Credit Bank as president, was arrested for accounting fraud (hiding
bad loans) in 1997. Although Kubota was judged guilty at the first trial in 2004 and at the second trial in2007, he was found innocent at the last trial in 2011.
43
Togo (2014) pp. 28–29.
41- 20 -

Sources  Bank of Japan (1985-99), Economic statistics monthly.
Government Printing Bureau (1927-2002), Official Gazette of Japan (Kanpo).
Jouyo Bank (1985-99), Annual financial statements.
Hyogo Bank (1985-95), Annual financial statements.
Jinji Koshin-jo (1979-93, 2001-09), Social directory of Japan.
Ministry of Finance (1952-98), Annual Report of the Banking Bureau.
–––– (1973), Directory of the Ministry of Finance, 1868-1972.
Nichigai Associates (2001), Who was who in Japan 1901-2000.
–––– (2004), Who is who in Japan 2004.
Nishi-Nippon Bank (1985-99), Annual financial statements.
Oita Bank (1985-99), Annual financial statements.
Study Group of Regional Banking History (2006), “Round-table talk with Toranosuke Nishino(ex-president of Jouyo Bank)”, In Corpus of the top regional bankers, Vol.14, Regional
Bankers Association of Japan, pp.1-40.
–––– (2012), “Round-table talk with Shozo Ando (ex-president of Oita Bank)”, In Corpus of
the top regional bankers, Vol.18, Regional Bankers Association of Japan, pp.1-38.
–––– (2013), “Round-table talk with Tsuneo Shindo (ex-president of Nishi-Nippon Bank)”, In
Corpus of the top regional bankers, Vol.19, Regional Bankers Association of Japan, pp.35-63.

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The eabh Working Papers Series (eabh Papers), launched in 2014, gives scholars inbanking, financial, business, and economic history and related fields the opportunity to
distribute their research-in-progress. Making these findings available to a wider audience,even at an early stage, supports authors’ search for qualified feedback, makes their work
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