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The Age of Balance Sheet Recessions: What Post-2008 U.S., Europe and China Can Learn from Japan 1990-2005
Richard C. KooChief Economist
Nomura Research InstituteTokyo
March 2009
1
Exhibit 1. US Economy Is Deteriorating Rapidly
70
72
74
76
78
80
82
84
86
98 99 00 01 02 03 04 05 06 07 08 09
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
8.5
Capacity Utilization(left Scale)
(%, Seasonally adjusted, inverted)
Unemployment Rate(right scale)
Sources: US Department of Labor, FRB
(%, Seasonally adjusted)
2
Exhibit 2. EU Economic Sentiments Are Worsening
65
70
75
80
85
90
95
100
105
110
115
120
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
(Seasonally adjusted)
Source: Ifo Business Survey, European Commission
Ifo Business Climate
Euro Area Economic Sentiment
3
Exhibit 3. Exports and House Prices Are Falling in China
-20
-15
-10
-5
0
5
10
15
20
25
03 04 05 06 07 08 0920
40
60
80
100
120
140(y/y%)
House price in Shenzhen (left scale)
($ bil., Seasonally Adjusted)
China's exports ($ bil., right scale)
Note: Seasonal adjustment by Nomura Research Institute.Sources: Nomura Research Institute, based on National Bureau of Statistics of China, National Development and Reform Commission(NDRC), People’s Republic of China, and Bloomberg.
4
Exhibit 4. Japan’s Industrial Production and Employments Are also Weakening
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
2000 2001 2002 2003 2004 2005 2006 2007 2008 200965
70
75
80
85
90
95
100
105
110
115
Note: The forecasts are calculated from METI's survey on planned production.Sources: Ministry of Economy, Trade and Industry (METI), and Ministry of Health, Labour and Welfare
Job offers to applicants ratio (left scale)
(Seasonally adjusted, 2005=100)(Seasonally adjusted)
Industrial production (right scale) forecast
5
Exhibit 5. Low Interest Rates Have Failed to Revive Economies or Asset Prices
0
1
2
3
4
5
6
7
8
2003 2004 2005 2006 2007 2008 2009
(%)
Sources: BOJ, FRB, ECB, BOE and RMB Australia. As of Mar. 18, 2009.
Australia
EU
US
UK
Japan
6
Exhibit 6. Features of Balance Sheet Recession
A balance sheet recession emerges after the bursting of a nationwide asset price bubble that leaves a large number of private-sector balance sheets with more liabilities than assets. In order to repair their balance sheets, private sector moves away from profit maximization to debt minimization.With the private sector de-leveraging, even at zero interest rates, newly generated savings and debt repayments enter the banking system but cannot leave the system due to the lack of borrowers.The sum of savings and debt repayments end up becoming the leakage to the income stream.The deflationary gap created by the above leakage will continue to push the economy toward a contractionary equilibrium until the private sector is too impoverished to save any money (=depression).In this type of recession, the economy will not enter self-sustaining growth until private sector balance sheets are repaired.
7
Exhibit 7. US Demand for Funds Is Falling Sharply
-50
-40
-30
-20
-10
0
10
20
30
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
(D.I.)
stronger demand for funds
weaker demand for funds
large and middle-market firms
small firms
housingbubble
collapseIT bubblecollapse
Source: Nomura Research Institute, based on FRB, Senior Loan Officer Opinion Survey on Bank Lending Practices .Note: D.I. are calculated from the answers to the question, "Apart from normal seasonal variation, how has demand for C&I loans changedover the past three months?"D.I. = ("Substantially stronger" + "Moderately stronger"×0.5) - ("Moderately weaker"×0.5 + "Substantially weaker")
8
Exhibit 8. US Housing Price Futures Moving Closer to the Japanese Experience
40
60
80
100
120
140
160
180
200
220
240
260
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
US: 10 Cities Composite Home Price Index
(US: Jan. 2000=100, Japan: Dec. 1985=100)
Sources: Bloomberg, Real Estate Economic Institute, Japan, S&P "S&P/Case-Shiller® Home Price Indices", as of Mar. 18, 2009.
Composite Index Futures(as of Mar. 18, 2009)
Japan: Tokyo Area Condo Price(per m2, 5 months moving average)
77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98
Japan: Osaka Area Condo Price(per m2, 5 months moving average)
Futures
Composite Index Futures(as of Sep. 19, 2007)
A fall in actual prices to the bottom forfuture prices would bring house prices
back to level of Dec. 2002
US
Japan
9
Exhibit 9. House Prices and Rents Diverged substantially during Housing Bubble
0
50
100
150
200
250
75 7677 7879 808182 8384 8586 8788 8990 919293 9495 9697 9899 0001 020304 0506 0708 0910 11
?
(91/1Q=100, Seasonally Adjusted)
Note: Seasonal adjustment by Nomura Research Institute.Source: Nomura Research Institute, based on Office of Federal Housing Enterprise Oversight (OFHEO) house priceindex and US Department of Labor CPI.
Rents
House prices
A 21% decline would bring houseprices back to level of 2003 Q4
21%
10
Exhibit 10. Americans Spent $1.5trn that Should Have Been Saved
-40
-20
0
20
40
60
80
100
120
95 96 97 98 99 00 01 02 03 04 05 06 07 08-2
-1
0
1
2
3
4
5
6
Saving rate (right scale)
($bn, seasonally adjusted)
Actual savings (left scale)
Amount needed to lift savingsto 4%* (left scale)
(%)
Note: Average savings rate for US households in1997-98.Source: Nomura Research Institute, based on US Department of Commerce data.
Savings shortfall = $1,544bn
4.5years atthis rate
11
Exhibit 11. Japan’s GDP Grew even after Massive Loss of Wealth and Private Sector Rushing to Pay Down Debt
0
100
200
300
400
500
600
700
800
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08200
250
300
350
400
450
500
550
600(Tril.yen, Seasonally Adjusted)
Real GDP(Right Scale)
Land Price Index in Six Major Cities(Commercial, Right Scale)
(Mar. 2000=100)
Sources: Cabinet Office, Japan Real Estate Institute
Nominal GDP(Right Scale)
Last seenin 1973
down87%
12
Exhibit 12. Cumulative Capital Losses on Shares and Land since 1990 Reached $15 Trillion or 3 Years Worth of Japan’s GDP
-1600
-1200
-800
-400
0
400
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07
Land Shares
Source: Cabinet Office, Japan "National Accounts"
(Tril. yen)
Land and SharesCombined
(Capital Loss)
(Capital Gain)
¥1,500trillion
Equivalentto $45
trillion lossin the US
13
Exhibit 13. Balance Sheet Problems Forced Japanese Businesses to Pay Down Debt even with Zero Interest Rates
Funds Raised by Non-Financial Corporate Sector
-10
-5
0
5
10
15
20
25
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08-4
-2
0
2
4
6
8
10
Borrowings from Financial Institutions (left scale)
Funds raised in Securities Markets (left scale)
CD 3M rate(right scale)
(% Nominal GDP, 4Q Moving Average) (%)
Sources: Bank of Japan, Cabinet Office, Japan
14
Exhibit 14. Japanese Government Borrowed and Spent the Excess Savings of the Private Sector to Sustain GDP
20
30
40
50
60
70
80
90
100
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
Source: Ministry of Finance, JapanNote: FY 2008 includes supplementary budget, and FY 2009 is just initial budget.
Government Spending
Tax revenueBubble Collapse
(Tril. yen)
totaladditional
deficit 90-05¥315 trillion
15
Exhibit 15. With Government Borrowing and Spending the Increase in Private Sector Savings*, Large Deficit Does Not Mean Higher Interest Rates
0
20
40
60
80
100
120
140
160
180
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 080
1
2
3
4
5
6
7
8
9
Balance Sheet Recession
(%)(% of GDP)
Japanese Government Debt as Percentage of GDP (left scale)
Yields on 10year JGB (right scale)
* Household savings plus corporate debt repaymentSources: Cabinet Off ice, Japan, Japan Bond Trading Co., Japan Securities Dealers Association
16
Exhibit 16. Japanese Companies Made Huge Progress in Reducing Debt Overhang
0
50
100
150
200
250
300
350
400
450
70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 0850
60
70
80
90(Yen tril., Seasonally Adjusted) (as a ratio to nominal GDP, %)
Credit Extended by the Banks to Corporate Sector
(Left Scale)
Credit Extended by the Banks toCorporate Sector
as a Ratio to Nominal GDP(Right Scale)
85/4Q
Sources : Bank of Japan, "Loans and Discounts Outstanding by Sector" "Loans to Individuals", Cabinet Office, Japan "National Accounts"Notes: 1. 'Credit Extened by the Banks to Corporation' is extended to 1970 by NRI after adjustment for discontinuities in statistics in 1993 and again in 1975. 2. As a percentage of nominal GDP. For GDP statistics before 1979, 68 SNA is used.
last seenin 1956
17
Exhibit 17. Japanese Corporate Leverage Came Down Sharply
0
1
2
3
4
5
6
7
76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
(Times)
Japan
US
Sources: Ministry of Finance, Japan, US Depertment of Commerce
18
Exhibit 18. Premature Fiscal Reforms in 1997 and 2001 Weakened Economy, Reduced Tax Revenue and Increased Deficit
0
10
20
30
40
50
60
70
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 090
10
20
30
40
50
60
70Tax Revenue
Budget Deficit
Hashimotofiscal
reformObuchi-Mori
fiscalstimulus
Koizumifiscal
reform
(Yen tril.) (Yen tril.)
(FY)
(with supplemental budget)*
(initial budget)*
Source: Ministry of Finance, Japan*: estimated by MOF
unnecessarydeficit:
¥97.6 tril.
19
Exhibit 19. Four Kinds of Banking Crises and Their Remedies
Type (I): 1989 S&L crisis
Type (II): 1982 Latin America debt crisis, nationwide credit crunch in the US between 1991 and 1993, and the Nordic banking crisis in the early 1990s
Type (III): Japan prior to 1995 (for example, problems at two credit cooperatives)
Type (IV): Japan since 1996, Taiwan since 2000, the US Great Depression of the 1930s, and US and UK subprime crisis since 2007
Source: Richard Koo, The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession, John Wiley & Sons, Singapore, 2008
YangNormal demand for
funds
YinWeak or non-existent
demand for funds
Localized(I)
Quick NPL disposalPursue accountability
(III)Normal NPL disposalPursue accountability
Systemic(II)
Slow NPL disposalFat spread
(IV)Slow NPL disposal
Capital injection
BankingCrisis
20
Exhibit 20. Two Capital Injections Ended the Credit Crunch in Japan
-120
-100
-80
-60
-40
-20
0
20
40
60
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08-9
-6
-3
0
3
6
9
12
15
18
21
24
27
30
33
(Shaded areas indicate periods of BOJ monetary tightening)Sources : "Tankan", "Loans and Discounts Outstanding by Sector", BOJ
Bankers' Willingness to Lend as Seen by the Borrowers, and the Actual Credit Extended by the Banks
Accommodative
Credit Extended by the Banks(right scale)
Large Enterprises(Left Scale)
Restrictive
Small Enterprises(Left Scale)
('Accommodative' minus 'Restrictive', %points) (Y/Y%)
1st Capital Injection(¥1.8 tril.) 2nd Capital Injection
(¥7.5 tril.)
Miyazawa Proposal
Bubble Burst
Credit Crunch
"Takenaka Shock"(rushed NPL disposal)
GlobalFinancial
Crisis
21
Exhibit 21. Percentage of House Purchases that May Lead to “Return the Key”
For Houses Bought before January 2009
0
5
10
15
20
25
30
35
40
45
50
At Present (Mar. 2009) Home Prices[-30.2%]
Lowest Price in Futures Market (Nov. 2010) [-37.3%]
40% below the Peak
(millions)
46.3% (2)
41.1% (2)
28.7% (2)
88.0% (1)
82.9% (1)
70.4% (1)
Source: Nomura Research Institute estimates from the data of US Department of Commerce, National Association of Realtors,S&P "S&P/Case-Shiller® Home Price Indices", and Bloomberg (as of Mar. 18, 2009).Notes: (1) Maximum share of underwater mortgages assuming that the total number of mortgages is 53 million. (2) As (1), but with a 10% downpayment.
22
Exhibit 22. Summary of US Policy Options Based on Japan’s Experience
Source: Nomura Research Institute
FiscalPolicy
MonetaryPolicy
Economic Stimulus
Capital Injection
Monetary easinglargely ineffective
except
Liquidity Injection
Weaker Dollar
• Government spending more effective than tax cuts• Must be fast acting and seamless for the duration of recession
• Effective in ending debilitating credit crunch• Politically unpopular but sooner and bigger the better
Keeps financial institutions operating
Benefit: Exports encouraged, Imports discouraged
Risks: • May trigger foreign capital outflow leading to higher interest rates • Accelerate imported inflation
Credit Easing(Asset Purchases)
Benefit: • Help financial institutions deleverage • May help unclog some markets if the Fed's presence is viewed as permanent
Risk: May saddle Fed's balance sheet with distressed assets and lead to a serious loss of trust in the Fed and the dollar
23
Exhibit 23. US Trade Deficit Is Still Enormous
-80000
-70000
-60000
-50000
-40000
-30000
-20000
-10000
0
10000
20000
30000
40000
50000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
($ mil., SA)
Japan's trade surplus
US trade deficit with ChinaUS trade deficit with Japan
US trade deficit(Census Basis)
China's trade balance
US RunningFederalBudget
Surpluses
Sources: US Department of Commerce, US Department of Treasury, Ministry of Finance Japan National Bureau of Statistics of China These data are seasonally adjusted by Nomura Research Institute.
24
Exhibit 24. Monetary Aggregates Behave Totally Differently under Balance Sheet Recession
0
50
100
150
200
250
300
70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08
High-powered Money (Average Balance)
Money Supply (M2+CD, Average Balance)
Credit Extended to the Private Sector
1990/1Q
TextbookEconomics
(monetary policyeffective)
Balance SheetRecession(monetary policyNOT effective)
(1990/1Q=100, Seasonally adjusted)
Note: Private sector borrowings seasonally adjusted by Nomura, adjustments made for discontinuities in line with BOJ's"Monetary Survey"Source: Bank of Japan
Down37%
QuantitativeEasing
25
Exhibit 25. Japan’s Money Supply Has Been Kept Up by Government Borrowings (I)
Sources: Bank of Japan "Monetary Survey", "Changes in Money Stock (M2+CD), and Credit Statistics"Notes: "Credit extended to others"= (1) public sector + (2) foreign assets (net) + (3) others.(1) Public Sector = credit to the government (net) + credit to regional public sector bodies + credit to public corporations(3) Others= (money + quasi-money + CD) - (foreign assets (net) + domestic credit).Therefore, increase or decrease in "Credit extended to others" will include impact of increase/decrease in public sector debt,increase/decrease in bank debentures issued by private sector banks and deposits of financial institutions, and errors in data.
-6
-4
-2
0
2
4
6
8
10
12
14
16
9 0 9 1 9 2 9 3 9 4 9 5 9 6 9 7 9 8 9 9 0 0 0 1 0 2 0 3 0 4 0 5 0 6 0 7
Credit Extended to Others (Mostly Government)
Credit Extended to the Private Sector
Money Supply (M2+CD)
(Y/Y%)
QuantitativeEasing
26
Exhibit 26. Japan’s Money Supply Has Been Kept Up by Government Borrowings (II)
CreditExtended tothe Private
Sector¥601.6 tril.
CreditExtended to thePublic Sector¥247.2 tril.
(+106.8)
Foreign assets(net)
¥74.1 tril.(+41.4)
Foreign Assets(net)
¥32.7 tril.
Credit Extendedto the Public
Sector¥140.4 tril.
Money Supply(M2+CD)
¥621.5 tril.
CreditExtended tothe Private
Sector¥501.8 tril.
(-99.8)
Other Liabilities(net)
¥78.7 tril.(-74.5)
Other Liabilities(net)
¥153.2 tril.
Money Supply(M2+CD)
¥744.4 tril.(+122.9)
Balance Sheets of Banks in Japan
December 2007
Total Assets ¥823.1 tril. (+48.4)Total Assets ¥774.7 tril.
December 1998Assets
AssetsLiabilities
Liabilities
Source: Bank of Japan "Monetary Survey"
27
Exhibit 27. US Money Supply Growth after 1933 Was also Made Possible by Government Borrowings
Balance Sheets of All Member Banks
CreditExtended tothe Private
Sector$29.63 bil.
Deposits$32.18 bil.
CreditExtended tothe Public
Sector$5.45 bil.
Other Assets$8.02 bil.
Reserves$2.36 bil.
Capital$6.35 bil.
OtherLiabilities$6.93 bil.
June 1929 Assets Liabilities
Total Assets $45.46 bil. Total Assets $33.04 bil. (-12.42) Total Assets $46.53 bil. (+13.49)
CreditExtended
to thePrivateSector
$15.71 bil.(-0.09)Credit
Extended tothe Private
Sector$15.80 bil.
(-13.83)
June 1936 Assets Liabilities
June 1933 Assets Liabilities
Deposits$23.36 bil.
(-8.82)
Deposits$34.10 bil.(+10.74)
CreditExtended
to thePublicSector
$8.63 bil.(+3.18)
CreditExtended
to thePublicSector
$16.30 bil.(+7.67)
OtherAssets
$6.37 bil.(-1.65)
OtherAssets
$8.91 bil.(+2.54)
Reserves$2.24 bil.
(-0.12)
Reserves$5.61 bil.(+3.37)
OtherLiabilities$4.84 bil.
(-2.09)
OtherLiabilities$7.19 bil.(+2.35)
Capital$4.84 bil.
(-1.51)
Capital$5.24 bil.(+0.40)
(= Money Supply)
Source: Board of Governors of the Federal Reserve System (1976) Banking and Monetary Statistics 1914-1941 pp.72-79
28
Exhibit 28. New Deal policies doubled fiscal expenditures without increasing the budget deficit
-4000
-2000
0
2000
4000
6000
8000
10000
12000
14000
23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41-8
-4
0
4
8
12
16
20
24
28($ mn, June)
Revenue (left scale)
Expenditures (left scale)
Budget deficit as % of GNP(right scale)
(%)
Source: Board of Governors of the Federal Reserve System (1976), Vol. 1, p. 513; US Bureau of the Census (1975), p. 229.
Unemployment rate(right scale)
New Deal policies
29
Exhibit 29. German fiscal stimulus reduced unemployment dramatically
-10
-5
0
5
10
15
20
25
30
35
1930 1931 1932 1933 1934 1935 1936 1937 1938-10
-5
0
5
10
15
20
25
30
35
Unemployment rate(right scale)
(DM bn) (%)
Governmentrevenue
(left scale)
Governmentexpenditure(left scale)
Fiscal deficit as %of GDP
(right scale)
Source: Mitchell (1975), p. 170; Flora et al. (1987), p. 350; Deutsche Bundesbank (1976).
Nazis come topower
N.A. N.A.
30
Exhibit 30. Debt Rejection Syndrome Can Last a Long Time: US Interest Rates Took 30 Years to Return to Their 1920s Level
0
1
2
3
4
5
6
7
8
9
1920 21 2223 24 2526 27 2829 30 3132 33 3435 36 3738 39 4041 42 4344 45 4647 48 4950 51 5253 54 5556 57 5859 60
US government bond yieldsPrime BA, 90daysUS government bond yields 1920-29 average (4.09%, June 1959)Prime BA, 90days 1920-29 average (4.13%, September 1959)
Oct '29 NY StockMarket Crash
Jun '50 Korean War
Dec '41 PearlHarbor Attack
(%)
'33~New Deal
Source: FRB, Banking and Monetary Statistics 1914-1970 Vol.1, pp.450-451 and 468-471, Vol.2, pp.674-676 and 720-727
31
Exhibit 31. The Anatomy of Balance Sheet Recession and Its Cure
Source: Richard Koo, Balance Sheet Recession: Japan's Struggle with Uncharted Economics and its Global Implications , John Wiley & Sons, Singapore 2003
Repair Balance Sheets
Private Sector Bought Assetswith Borrowed Funds
Fall in Asset Prices
Private Sector Moves away from Profit Maximization to Debt Minimization
Central Bank Panics andDramatically Eases MonetaryPolicy
Balance Sheet Problems Develop
Fall in Aggregate DemandPrivate Sector Paying Down Debt
Nothing Happens because Private Sector Is Minimizing Debt
No Demand for Funds Weaker Economy and Deflation
The Problem
The Solution
Vicious Cycle
Private Sector SavingsOriginal Money Flow
"Liquidity Trap"
Breaking theVicious Cycle
Allow Private Sector toPay down Debt
Keep AggregateDemand from Falling
Further Fall in Asset Prices
Fiscal Stimulus
Government ProcuresFunds at Low Rates due tothe Lack of Private SectorBorrowers
Government Borrowings HelpMaintain Money Supply in the Absenceof Private Sector Borrowers
More Defaults
More Non-Performing Loans at Banks
32
Source: Richard Koo, The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession , John Wiley & Sons, Singapore, April 2008 p.160.
(1) Monetary policy is tightened, leading the bubble to collapse.
(5) Private sector phobia towards borrowing gradually disappears,and it takes a more bullish stance towards fund raising.
(8) With the economy healthy,the private sector regains its vigour,
and confidence returns.
(9) Overconfident private sector triggers a bubble.
(7) Monetary policy becomes the maineconomic tool, while deficit reduction
becomes the top fiscal priority.
(6) Private sector fund demand recovers,and monetary policy starts working again.
Fiscal policy begins to crowd out private investment.
(4) Eventually private sector finishes its debt repayments,ending the balance sheet recession.
But it still has a phobia about borrowing which keepsinterest rates low, and the economy less than fully vibrant.
Economy prone to mini-bubbles.
(3) With everybody paying down debt,monetary policy stops working.
Fiscal policy becomes the main economic toolto maintain demand.
(2) Collapse in asset prices leaves private sectorwith excess liabilities,
forcing it into debt minimization mode.The economy falls into a balance sheet recession.
BubbleYin (=Shadow) Yang (=Light)
Exhibit 32. Yin Yang Cycle of Bubbles and Balance Sheet Recessions
Germany
Japan
US
India
China
UK
Spain
33
Exhibit 33. Contrast Between Yin and Yang Phases of a Cycle
Yang YinTextbook economy Balance sheet recession
Adam Smith's "invisible hand" Fallacy of composition
Assets > Liabilities Assets < Liabilities
Profit maximization Debt minimization
Greatest good for greatest number Depression if left unattended
Effective Ineffective (liquidity trap)
Counterproductive (crowding-out) Effective
Inflation Deflation
Normal Very low
Virtue Vice (paradox of thrift)
a) Localized Quick NPL disposalPursue accountability
Normal NPL disposalPursue accountability
b) Systemic Slow NPL disposalFat spread
Slow NPL disposalCapital injection
Source: Richard Koo, The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession , John Wiley & Sons, Singapore, 2008
5) Outcome
6) Monetary policy
7) Fiscal policy
1) Phenomenon
2) Fundamental driver
3) Corporate financial condition
4) Behavioral principle
8) Prices
9) Interest rates
10) Savings
11) Remedy forBanking Crisis
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