The Japanese Banking Crisis

Abstract

Since the mid-1980s, Japan, which was a leading competitor in the world’s manufacturing sector, tried to transform itself to an economy with domestic demand-led mature growth. The ensuing bubbles, busts, and banking crisis, however, left the country chronicle deflation and stagnation. This book analyzes why the Japanese authorities could not avoid making choices that led to this outcome. This report describes policy responses to the boom, bust, crisis, and recovery Japan experienced during the two decades from 1986 to 2004. One hundred and fifty years ago, Japan started to westernize itself after the two centuries of isolation. Since then, it has made two miracles and two major mistakes.