Banking Crises and 'Japanization': Origins and Implications

37 Pages Posted: 30 Jul 2013

Date Written: July 30, 2013

Abstract

Japan’s “two lost decades” perhaps represent an extreme example of a weak recovery from a financial crisis, and are now referred to as “Japanization.” More recently, widespread stagnation in advanced economies in the wake of the global financial crisis led to fears that Japanization might spread to other countries. This study examines the dimensions of Japanization — including low trend growth, debt deleveraging, deflation and massive increases in government debt — and analyzes their possible causes — including inadequate macroeconomic policy responses, delayed banking sector restructuring, inadequate corporate investment, loss of industrial competitiveness, a slowdown in total factor productivity (TFP) growth due to excessive regulation and economic rigidities, and an aging society.

Keywords: economic growth, total factor productivity, inflation, demographics, credit growth, banking crises

JEL Classification: E20, E31, E51, F31, G01

Suggested Citation

Kawai, Masahiro and Morgan, Peter J., Banking Crises and 'Japanization': Origins and Implications (July 30, 2013). ADBI Working Paper 430, Available at SSRN: https://ssrn.com/abstract=2303596 or http://dx.doi.org/10.2139/ssrn.2303596

Masahiro Kawai (Contact Author)

Asian Development Bank Institute ( email )

Kasumigaseki Building 8F 3-2-5
Kasumigaseki Chiyoda-ku
Tokyo, 100-6008
Japan

Peter J. Morgan

ADBI ( email )

Kasumigaseki Building 8F 3-2-5
Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

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