Abstracts » Business, international

All talk: Tokyo takes a weak swipe at Japan's bank crisis

Article Abstract:

Japan's powerful finance ministry shows signs of weakness in its plan for helping banks deal with their bad debts, released on June 8, 1995, to widespread disappointment. Rather than outlining a way to use taxpayer money, as many hoped, it calls for disclosure of bad debts, better deposit insurance, and using insurance money to prevent bankruptcies. Some analysts say the plan is not bad, and that it finally recognizes the need to let some banks sink while postponing the day of reckoning. The plan is likely to change.

Japan, Economic policy

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Small change: China's banks labour with the baggage of their past

Article Abstract:

China's state-owned banks remain deeply troubled despite several promising signs and moves in the right direction. The greatest problem is the legacy of having to support money-losing state-owned enterprises, resulting in bad debt estimated at 30% of the four largest banks' assets. A new policy easing credit is helping somewhat, but most of the new money goes to the same favored firms, while smaller or private ones go begging. The state-owned banks are also beginning to show signs of distinctiveness or individuality.

Bank of China

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The reality of change

Article Abstract:

China's 1995 commercial banking law seems to herald a new committment to reforming a system where loans to state enterprises were considered subsidies that need not be repaid. Some estimates say a third of that money will never be recovered. However, the new era of tighter credit also has its drawbacks, and is hurting such borrowers as real-estate companies used to the type of lending environment Tokyo saw in the late 1980s. Deregulation could also allow unhealthy risk-taking in loans by inexperienced officers.

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