IT and Financial Systems in the 21st Century

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In this research project we have investigated the main theme on "IT. and Financial Systems in the 21st Century" from 2003 to 2006. We invited foreign collaborating researchers (Thyler Shumway (University of Michigan and Stanford University), Luchia Christova (Bank for International Settlements), Jeniffer Corbett (Australian National University), Inchul Kim (Sung Kyun Kwan University) and others) to the two international conferences that were held on March 18, 2005 and February 20, 2007 at Hitotsubashi University to make presentation of their own papers. Also we received useful comments from them on our members' papers to revise the papers into academically better ones. The papers that we made presentation of as this research project's performance clarify how the IT revolution has effects on financial service industry and its surroundings from a variety of viewpoints. Concretely, the research project used to theoretical and empirical analyses to consider effects developments of IT on (1) surroundings of the Japanese financial industry, (2) consumer behavior, firm behavior, financial institution's behavior, and (3) policy reactions of policy-makers. Regarding Effects on the surroundings around financial industry, the developments of IT are diversifying financial products and accelerating speed of transmitting information. Both the diversifying financial products and accelerating speed of transmitting information enhance efficiency in financial transactions for households as investors, firms as borrowers, and financial institutions as financial intermediaries. On one hand, it is pointed out investors might act in a fashion of non-economic behavior from a viewpoint of behavioral economics. Moreover, this research project pointed out that a market-based monetary policy is necessary for efficient financial markets with accelerating speed of transmitting information.