TOKYO -- Japan plans to open detailed banking-sector data to outside researchers as early as this fiscal year, Nikkei has learned, allowing them to analyze information from major lenders in a bid to uncover unidentified risks and improve financial regulation and supervision.

The Financial Services Agency will make available a database it jointly operates with the Bank of Japan containing supervisory information on banks. The agency recently finalized guidelines governing joint research projects with universities and other institutions.

Authorities collect management and financial data from roughly 100 institutions, including major national banks and regional lenders, with detailed loan information stored in the database since fiscal 2022. The BOJ separately gathers information through its own examinations.

The database contains sensitive information, including companies' individualized outstanding borrowings, lending rates and borrower classifications. Supporting documents underlying those records are also maintained, making the database a highly comprehensive repository of information.

Researchers could use the data to analyze how rising interest rates affect mortgage repayment risks or to assess the financial condition of companies that received government-backed, effectively interest-free coronavirus pandemic loans. Lending trends could also provide early signs of economic shifts in specific regions.

Access to the database will be restricted to computers within the FSA. Researchers will be subject to strict confidentiality requirements. Papers and other publications based on the data will undergo screening before release, with bank and company names anonymized.

Outside experts will help determine what information can be disclosed publicly. Authorities also plan to provide access to certain bond-trading and other market data collected for the Financial Stability Board, the international body that coordinates regulation among major economies.

Japan has made efforts to increase evidence-based policymaking -- the use of objective data rather than precedent or personal experience -- but its application has so far been limited to areas like evaluating the effectiveness of subsidy programs. Wider use of data-driven analysis is seen as essential to improving government efficiency at a time of fiscal constraints.

Outside expertise is crucial to evidence-based policymaking. The hope is that opening up this data will uncover credit risks that the FSA could not see on its own.

As interest rates rise, there is a growing gap in financial soundness between big banks and their smaller counterparts. The FSA plans to use research results to craft regulations and supervisory guidelines to prevent cracks in the financial system. Going forward, it will consider expanding the available data to include other financial instruments such as deposits. Other countries are ahead of Japan in tapping data for policy purposes.

The U.K. government employs economists in this role. When budgets are being compiled, Treasury economists examine cost-benefit analyses for funding requests that have been prepared by economists in those ministries. In the U.S., the Foundations for Evidence-Based Policymaking Act, passed in 2019, requires agencies to designate data officers.

More financial authorities are making data more widely available as well, including the European Central Bank, which uses outside research for its policy analyses.