Sorting Out Japan's Financial Crisis
Anil K. Kashyap
University of Chicago, Booth School of Business; National Bureau of Economic Research (NBER); Federal Reserve Bank of Chicago
NBER Working Paper No. w9384
This paper makes three contributions. First, I report information on the size of the Japanese financial crisis. Drawing principally on work by Fukao (2003) and Doi and Hoshi (2003) I estimate that the current taxpayer liability for losses incurred but yet to be recognized is likely to be at least 24% of GDP. Second, I explain why it has been so difficult to end the crisis. Third, I sketch the likely ingredients of what will be required to successfully resolve the crisis. The overarching principle is that Japan's banks, insurance companies, and government financial agencies all suffer different problems and require different solutions. But all three sectors are connected, and a failure to tackle concurrently the problems of all three promises to doom any reform plan.
Number of Pages in PDF File: 16
Date posted: December 14, 2002