pt10 Flashcards
(10 cards)
What social factors supported Japan’s economic evolution?
A highly educated workforce and a culture of continuous improvement (kaizen).
What triggered Japan’s economic crisis in the early 1990s?
The collapse of an asset price bubble.
How did an increase in borrowing rates affect the Nikkei Index?
It made credit more expensive, reducing investment and speculation, leading to a sharp drop in the stock market.
How did higher interest rates affect land prices in Japan around 1990?
They discouraged borrowing, reducing demand for real estate, and causing land prices to fall.
How did Japanese banks respond to the early 1990s crisis?
By evergreening loans and becoming risk-averse, restricting credit.
What is “evergreening” in the context of Japan’s banking crisis?
Rolling over bad loans to avoid recognizing losses.
What was a key result of banks tightening credit in the 1990s?
A worsening credit crunch and slowed economic recovery.
What happened to many Japanese banks by the late 1990s?
They became insolvent, resulting in a banking crisis.
How did the government try to address bank failures?
By injecting public funds into the financial system.
Why are the 1990s and 2000s often called Japan’s “Lost Decades”?
Due to prolonged economic stagnation and deflation following the bubble collapse.
