NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Sorting Out Japan's Financial Crisis

Anil K. Kashyap

NBER Working Paper No. 9384
Issued in December 2002
NBER Program(s):   CF   EFG   ME

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.

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Document Object Identifier (DOI): 10.3386/w9384

Published: Kashyap, Anil K. "Sorting Out Japan's Financial Crisis," FRB Chicago - Economic Perspectives, 2004, v26(4,4th-Qtr), 42-55. citation courtesy of

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