Japan faces financial crisis with banks struggling to eke out profit
Tokyo — Japanese banks lag behind their global counterparts in boosting profitability as they compete for dwindling lending opportunities in a shrinking market, the country’s central bank said on Monday. Prolonged ultra-loose monetary policy has squeezed margins of financial institutions in many advanced economies including Japan, where its central bank caps borrowing costs at zero percent through aggressive money printing to reflate growth. But structural factors are also behind declining profits at Japanese banks which, if left unaddressed, could destabilise the banking system, the Bank of Japan (BOJ) said. "Financial institutions in advanced economies with low interest rates are all facing falling profitability. But global comparisons show profitability is particularly low in Japan," the central bank said in a semi-annual report analysing the banking system. "Japanese banks may be saddled with an excess of employees and outlets, which is intensifying competition within the indust...
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