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Credit derivatives premium as a new Japan premium.


JEL codes: G10 G15 G21

Keywords: credit derivative, Japan premium, Japanese bank.

AT THE HEIGHT of the Japanese banking crisis of 1997-98 a popular indicator of weakness was the so-called Japan premium, that is, the premium in the interest rate charged to Japanese banks in the interbank market. The internationally active Japanese banks had to pay a premium in borrowing US dollars and, to a abundant lesser extent, Japanese yen, from western banks. The Japan premium was considered to throw back western banks' skepticism on opaque accounting and supervision. The Japan premium disappeared after the next to the first capital injection to major banks


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