The extent of deflation in Japan is much smaller than that during the Great Depression, which was well over minus 10 percent. In addition, Japan is suffering from the burst of asset price bubbles in the late 1980s. Asset prices fell dramatically.
Now, stock prices are one-third of the peak, and real estate prices are about a quarter of the peak during the bubble period. Although stock prices are rising recently, real estate prices are still falling. Asset price deflation, the decline in real estate prices in particular, is making a greater negative impact on the banking sector than the falling prices in goods and services.