The Japanese Banking Crisis

Understanding a Defining Financial Crisis

Japan’s banking crisis of 1997–98 reshaped the country’s financial system and became a touchstone for regulators worldwide. In The Japanese Banking Crisis, Himino Ryozo brings together rare insider knowledge, rigorous analysis, and a clear-eyed view of what went wrong. Drawing on his career at the forefront of financial policy-making in Japan and internationally, Ryozo examines the causes, the policy missteps, and the hard-won lessons from a period of profound economic stress.

What the Book Covers

The book follows the full arc of the crisis, from the asset price bubble of the late 1980s to the slow recovery. It explains how export-led growth reached an impasse, how financial deregulation changed the competitive landscape, and how monetary and prudential policies interacted with land and fiscal policies to inflate and then puncture the bubble. Ryozo also details the “in-between years,” when regulators grappled with the size of the problem and the painful choices that followed.

From Bubbles to Resolution

• Bubbles: The forces that drove credit expansion and inflated asset prices.
• Pricking Bubbles: The monetary and prudential measures that eventually triggered the downturn.
• In-Between Years: The struggle to estimate losses and the political economy of inaction.
• Crisis: The capital injections, supervisory reforms, and social costs of the 1998 collapse.
• Restructuring Banks and Borrowers: How bad loans were resolved, banks recapitalized, and corporations restructured.
• What Japan Gained and Lost: A balanced assessment of the crisis’s long-term consequences.

Lessons for Today’s Policymakers

Ryozo’s analysis goes beyond Japan. He shows that many of the difficult choices, missed opportunities, and institutional failings are not unique to Japan. The book offers practical insights for financial supervisors, central bankers, and finance ministries worldwide on how to recognize emerging risks, act early, and manage the social and economic fallout of banking distress.

About the Author

Himino Ryozo is the commissioner of Japan’s Financial Services Agency (JFSA) and chair of the Financial Stability Board’s Standing Committee on Supervisory and Regulatory Cooperation. He previously served as secretary general of the Basel Committee on Banking Supervision, where he helped finalize the Basel II capital adequacy standards. His deep regulatory experience and international perspective inform every chapter of this book.

Who Should Read This Book

This ebook is valuable reading for financial regulators, central bankers, economists, university students, and anyone seeking a thorough, evidence-based understanding of banking crises. Because it is published as an open-access title, readers have broad access to the full text.

A Valuable Case Study

The Japanese Banking Crisis is more than a history lesson. It is a practical guide to the links between credit cycles, regulatory behavior, and economic stability. With clear explanations, useful figures, and a strong policy focus, Ryozo has created a reference that will remain relevant for future crisis managers.