cause, effect and recommendation: financial crisis in japan
INTRODUCTION
Long before the United States faced the economic bubble in 2006 that has affected many parts of the United States housing market, the Japan already undergone such situation and they manage to overcome it although it went on for so many years. During the 1990s and into the early years of the 21st century, Japan experienced prolonged recessionary economic conditions triggered by the bursting of a bubble in its equity and real estate markets and an ensuing banking crisis. (Nanto, 2009)
Japan experience now has becoming a model for many countries especially the U.S in coping with the housing bubble. Many countries have turned Japan experience in shaping various policies to improve the understanding on the crisis that they are currently facing. However, in this paper we will be discussing on the causes of the crisis, the impact and also some recommendation that we think suitable in counter back such crisis. The causes are various if we look into each aspect such as policy, practices, regulatory and much more but we only focus on several causes such as bank failure and liquidity problem. There are also many impacts from the Japan’s bubble crisis but in this paper we are focusing more on the loans impact and little about the firm’s impact. In recommendation, we try to give our idea based on how the Japanese cope up with the crisis during the bubble period.
Briefly, the Japanese asset price bubble was an economic crisis situation faced by Japan from 1986 to roughly 1991 which real estate and stock prices were greatly inflated. The bubble period saw the price of land, art and even golf club membership rose to very high levels. The total value of land in Japan in 1980 at one point was over four times the real estate value of the entire United States. At this point, the banks and the monetary agencies not yet realize how deep their problem is. Land development assumes it is only the nature of the Japanese terrain that real estate values would always raise due
Long before the United States faced the economic bubble in 2006 that has affected many parts of the United States housing market, the Japan already undergone such situation and they manage to overcome it although it went on for so many years. During the 1990s and into the early years of the 21st century, Japan experienced prolonged recessionary economic conditions triggered by the bursting of a bubble in its equity and real estate markets and an ensuing banking crisis. (Nanto, 2009)
Japan experience now has becoming a model for many countries especially the U.S in coping with the housing bubble. Many countries have turned Japan experience in shaping various policies to improve the understanding on the crisis that they are currently facing. However, in this paper we will be discussing on the causes of the crisis, the impact and also some recommendation that we think suitable in counter back such crisis. The causes are various if we look into each aspect such as policy, practices, regulatory and much more but we only focus on several causes such as bank failure and liquidity problem. There are also many impacts from the Japan’s bubble crisis but in this paper we are focusing more on the loans impact and little about the firm’s impact. In recommendation, we try to give our idea based on how the Japanese cope up with the crisis during the bubble period.
Briefly, the Japanese asset price bubble was an economic crisis situation faced by Japan from 1986 to roughly 1991 which real estate and stock prices were greatly inflated. The bubble period saw the price of land, art and even golf club membership rose to very high levels. The total value of land in Japan in 1980 at one point was over four times the real estate value of the entire United States. At this point, the banks and the monetary agencies not yet realize how deep their problem is. Land development assumes it is only the nature of the Japanese terrain that real estate values would always raise due
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