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The Japanese Banks in the Lasting Low-, Zeroand Negative-Interest Rate Environment

Taiki Murai () and Gunther Schnabl ()
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Taiki Murai: Leipzig University, Institute of Economic Policy, Grimmaische Straße 12, 04109 Leipzig, Germany

Credit and Capital Markets, 2021, vol. 54, issue 1, 1-16

Abstract: The bursting of the Japanese bubble economy in the early 1990s put the stage for a lasting low- zero-, and negative-interest rate environment, which fundamentally changed thebusiness environment for the Japanese commercial banks. On the income side, with interest margins becoming increasingly depressed, net interest revenues declined, which forced the banks to expand revenues from fees and commissions. The banks had to cut costs by reducing the number of employees, closing branches and merging into larger banks. The gradual concentration process has most recently cumulated in the relaxation of the monopoly law. With the capital allocation function of banks being undermined, the Japanese economy has become zombified, suffering from anemic growth.

Keywords: Japan; Bank of Japan; monetary policy; banks; interest margin; financial repression; concentration; regional banks (search for similar items in EconPapers)
JEL-codes: E50 E52 G21 (search for similar items in EconPapers)
Date: 2021
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Working Paper: The Japanese banks in the lasting low-, zero- and negative-interest rate environment (2020) Downloads
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Handle: RePEc:kuk:journl:v:54:y:2021:i:1:p:1-16