[The Japanese Banking Crisis: Where Did It Come from and How Will It End?]: Comment (original) (raw)
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Journal of the Japanese and International Economies, 2003
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Japan's Financial Crisis and Economic Stagnation
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T he recent Japanese economic experience has been dismal. Growth has collapsed, deflation has taken hold and the financial system is in shambles. We begin our story by documenting the macroeconomic troubles that appear to have triggered the collapse of Japan's financial sector. We argue, however, that the macroeconomic factors alone are not likely to explain the full extent of the problems in the Japanese financial system. We then turn to the sector-specific factors that are facing the Japanese banks, insurance companies and government financial institutions, which together constitute roughly three-quarters of the financial system. Finally, we provide estimates of the size of the losses that have been accumulated and review the steps necessary to resolve the problems promptly so that the losses stop growing.