In addition, when macroeconomic conditions are weak, the dynamics of bank loans are affected by demandside factors. Having said this, it is important to closely monitor developments in credit in order to assess to what extent supply-side constraints may play a role in limiting credit availability.
The Bank of Japan introduced the Tracing Method of asset assessment and loan losses in order to support financial institutions to maximize the use of their own assessments as a management tool. The Tracing Method is used to observe changes in the condition of individual assets in a time series and is one way to utilize financial institutions’ self-assessment of assets.