Japanese Banks and the Asset Price "Bubble"

November 1, 1993

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Steven M. Fries Japanese Banks and the Asset Price "Bubble", (USA: International Monetary Fund, 1993) accessed September 19, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

With the recent collapse of the asset price “bubble,” Japanese banks encountered significant pressure from both a sharp decline in the value of equity holdings and a marked increase in bad loans. In August 1992, the Government initiated measures that stabilized equity prices and assisted banks in managing their nonperforming loans. While the major banks disclosed that 4.6 percent of their total loans were nonperforming at the end of FY 1992, a mechanical estimate of all banks’ nonperforming and restructured loans is 6-7 percent of their total loans--a serious yet manageable problem. The main policy implications are to ensure the reasonably prompt resolution of the bad loan problem and to enhance market discipline to prevent its recurrence.

Subject: Bank credit, Banking, Distressed assets, Financial institutions, Financial sector policy and analysis, Fiscal accounting and reporting, Loans, Money, Nonperforming loans, Public financial management (PFM)

Keywords: Bank credit, City bank, Distressed assets, Fiscal accounting and reporting, Loan, Loan loss, Loans, Long-term credit, Long-term credit bank, Market power, Middle East, Ministry of Finance bank inspector, Nonbank, Nonperforming loans, Profit, Trust account, Trust bank, WP

Publication Details

Pages:

52
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1993/085
Stock No:

WPIEA0851993
ISBN:

9781451954302
ISSN:

1018-5941

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