In this regard, Japanese firms have been diligent, of course. Typical examples are production and inventory management through just-in-time systems as well as kaizen (continuous improvement), a term that has made it into English. Following the burst of the bubble, Japanese firms have also been working on reducing labor costs. For individual firms, efforts to pursue operational efficiency are certainly important.
They need now to consider what they can do to make themselves more efficient and remain competitive, whether that is through mergers or other means. The recently introduced tiering system, which exempts a significant portion of banks’ deposits from the negative interest rate, is providing considerable relief for banks. And the ECB’s monetary policy has not only had negative consequences for banks’ profits.