Prior to the collapse of the “bubble” economy, brief periods of stagnant domestic demand were overcome through (1) active export drives by firms especially in manufacturing industry, which compensated for the weak domestic demand; and (2) an improvement in cash flow as a result of monetary easing and the positive lending attitude of financial institutions, which facilitated corporate financing and business fixed investment especially in nonmanufacturing industry.
More recently, the CAMEL rating system, too, has been revised by the banking agencies to place more emphasis on the adequacy of a bank’s risk management practices and was expanded to include a specific “S” rating for an institution’s sensitivity to market risk.