Japanese banking problems: implications for lending in the United States
Fueled by a high saving rate, active exporting firms, and a booming stock market, Japanese banks expanded aggressively worldwide during the 1980's. By 1988, all of the 10 largest banks in the world were Japanese, with a significant presence in Southeast Asia, Europe, Latin America, and the United States. In the 1990's, however, the tide turned. Japanese banks experienced a significant diminution of capital as a result of sharp declines in the Japanese stock market and substantial increases in nonperforming loans. Increasingly constrained by international capital requirements, Japanese banks began to shrink their international operations while insulating their domestic lending operations. ; This article examines factors affecting the Japanese banking presence in the United States. In particular, the authors examine the role that capital requirements played in the decisions by Japanese banks to reduce their lending here. Because U.S. banking markets have been unusually open by international standards, and because of the large penetration by Japanese banks, the experience here provides useful insights into how globally active banks may react in the future to problems in their domestic markets.
Volume (Year): (1999)
Issue (Month): Jan ()
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kenneth R. French & James M. Poterba, 1990.
"Were Japanese Stock Prices Too High?,"
NBER Working Papers
3290, National Bureau of Economic Research, Inc.
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- Allen B. Frankel & Paul B. Morgan, 1992. "Deregulation and competition in Japanese banking," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Aug, pages 579-593.
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