Non-performance Assets of Banks and Financial Intermediation: Experiences of Japan in the Inter-war Period
The Japanese banks are now holding a lot of non-performing
assets as asset prices fall. The Japanese banks were also holding
a large amount of non-performing assets in the inter-war period.
The experiences of Japan in the inter-war period may provide useful
lessons for the problem of today's Japanese banks. In this paper,
we consider what effects the non-performing assets of the Japanese
banks had on the financial intermediation in the inter-war period.
In addition, we analyze economic meanings of those effects.
We can infer from several evidences that there were the deterioration of financial intermediation in the inter-war period. According to the experiences in the inter-war period, we can also infer that the prompt action in required collection and required redemption of non-performing assets might be effective in the recovery of financial intermediation.
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