Financial Reorganization in Japan Can Japanese Banks Survive?

Abstract

After realizing almost 20 years of prosperity,the Japanese economy started to stagnate in the mid-1970s. Especially, a phenomonal bubble economy was created by the end of the 1980s. After the bubble period, enormous bad debts were created in Japanese banks. As of 1999, a sum of 7.3 trillion yen of taxpapers’ money was infused into the major banks in Japan. But they are only at the start of the problem settlement. It is a big question whether they can survive in the worldwide financial severe competition or not. Now Japanese banks are seeking the possibilities of partial, overall and total consolidations. Some of their integrations is going to be achieved through a formation of a holding company, which is really the direction indicated in the reform plan for the financial system under the Japanese Big Bang. These efforts should be grand experiments and whether they can survive or not depends upon the results of these experiments.