It is pointed out that this is partly because financial technology is not well developed in separating the risk related to a firm from that related to a project which the firm undertakes like in project finance. It thus seems unlikely that the Japanese economy will regain dynamism without an improvement in the balance sheets of the corporate sector. V.  The U.S.
Therefore, as trading in those credit instruments grew, new portfolio models were developed to take on board the interaction between Credit risk and Market risk. Traditionally, regulation has distinguished between Credit risk and Market risk, and has treated both risks independently. The Basel II Accord requires banks to keep capital for Credit risk for banking book exposures and Market risk for trading book exposures.