Japan: The banks are back! Or are they?

Maximilian Hall

Discussion Paper Series from Department of Economics, Loughborough University

Abstract: Since fiscal 2003, the 'performance' of the Japanese banking sector, in terms of profitability, asset quality, and capital adequacy, has improved markedly as the real economy has recovered, suggesting that the widespread pessimism (see, for example, Hall, 2006 and IMF, 2003) expressed earlier concerning the fragility of the sector was somewhat overdone. Yet, despite these positive developments, a number of serious challenges still face the Japanese banking industry and their supervisors. Core profitability, for example, remains very weak, in part due to wafer thin lending margins at home and sluggish corporate loan demand. Asset quality has also widely suffered because of exposure to the re-regulated consumer finance industry and the US sub-prime market. And controversy still surrounds the issues of bank "under-reserving" and regulatory tolerance of "double gearing" on the capital adequacy front. These, and other, problems must be resolved if Japanese banks are to finally re-claim the ground lost to international competitors over the last 15 years or so and secure lasting improvement in their financial health.

Keywords: Japanese Banking; Performance – Capital Adequacy and Profitability; Supervision; Financial Stability. (search for similar items in EconPapers)
JEL-codes: G21 G28 G32 (search for similar items in EconPapers)
Date: 2008-07, Revised 2008-07
New Economics Papers: this item is included in nep-ban, nep-cfn and nep-reg
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.lboro.ac.uk/departments/ec/RePEc/lbo/lbowps/BanksBackfp.pdf
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.lboro.ac.uk/departments/ec/RePEc/lbo/lbowps/BanksBackfp.pdf [301 Moved Permanently]--> https://www.lboro.ac.uk/departments/ec/RePEc/lbo/lbowps/BanksBackfp.pdf)

Related works:
Journal Article: Japan: the banks are back! Or are they? (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lbo:lbowps:2008_05

Access Statistics for this paper

More papers in Discussion Paper Series from Department of Economics, Loughborough University Contact information at EDIRC.
Bibliographic data for series maintained by Huw Edwards ().