Given that the firms’ profitability relative to total assets, i.e., the ROA, was 3.24 percent, this is at an extremely low level (Chart 22). In short, firms have been able to raise ample funds at a rate substantially lower than their profitability. As such, financial conditions in Japan are accommodative.
It might be early, but it is possible that the investment drought that has afflicted the U.S. economy for the past five years may finally be breaking.