Abstract

Japanenese banks over the past decade appear to have been more concerned with market penetration than with earnings and shareholder wealth maximisation. This paper reports the results of an analysis of bank safety levels using a cross sectional sample of Japanese and European Banks compared in light of the unacceptably high reported levels of non-performing loans in the Japanese banking sector. The results confirm that more attention should have been applied to balance sheet fundamentals in Japanese banking. It is conjectured that bank safety levels would have been higher and that the more prudent use of credit risk assessment and management would have avoided balance sheet problems.

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