During the period of weakness and recovery, quite a large amount of core deposits flowed back into banks of all sizes reflecting lower interest rates on alternative assets, the softness of the stock market, and the public’s desire for safe assets. As a result, banks had ample liquidity and the resources to fund asset growth.
Bank of Japan’s monthly report of recent economic and financial developments1 Bank of Japan, Communication, 16/02/99. The Bank’s View2 The economic deterioration in Japan has become moderate against the background of the increase in public investment. Business fixed investment has been declining significantly. As for housing investment, housing starts are bottoming out but remain at a low level.