Japanese Banks -A Risk Factor for the Japanese Economy

摘要

The banking sector in Japan has been in deep crisis for more than ten years now and primary commercial banking functions are disrupted. Banking reform is making institutional progress now, but important performance indicators show that the situation in the banking sector is still difficult. The share of non-performing loans, for example, has fallen only slightly despite governmental interventions. Owing to write-offs on these loans the costs of banking business are also relatively high. Another difficulty is that the interest income realisable is low. Deflation has persisted for four years, and is still causing difficulties for the banks, as there is little incentive to borrow in such a situation. Hence, the volume of lending has been falling for more than three years. The commercial banking sector, which should actually help to diversify and transform risks, is thus itself a risk factor for macroeconomic development. One way out of the crisis would be greater international integration of the Japanese banking sector.