EconStor >
Asian Development Bank Institute (ADBI), Tokyo >
ADBI Working Paper Series, Asian Development Bank Institute >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/53708
  
Title:Lessons from Japan's banking crisis, 1991 - 2005 PDF Logo
Authors:Fujii, Mariko
Kawai, Masahiro
Issue Date:2010
Series/Report no.:ADBI working paper series 222
Abstract:The Japanese government's response to the financial crisis in the 1990s was late, unprepared and insufficient; it failed to recognize the severity of the crisis, which developed slowly; faced no major domestic or external constraints; and lacked an adequate legal framework for bank resolution. Policy measures adopted after the 1997 - 1998 systemic crisis, supported by a newly established comprehensive framework for bank resolution, were more decisive. Banking sector problems were eventually resolved by a series of policies implemented from that period, together with an export-led economic recovery. Japan's experience suggests that it is vital for a government not only to recapitalize the banking system but also to provide banks with adequate incentives to dispose of troubled assets from their balance sheets, even if that required the government to mobilize regulatory measures to do so, as was done in Japan in 2002. Economic stagnation can cause new nonperforming loans to emerge rapidly, and deplete bank capital. If the authorities do not address the banking sector problem promptly, then the crisis will prolong and economic recovery will be substantially delayed.
JEL:G01
G21
G28
Document Type:Working Paper
Appears in Collections:ADBI Working Paper Series, Asian Development Bank Institute

Files in This Item:
File Description SizeFormat
631101020.pdf238.56 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/53708

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.