There is little doubt that the delay in cleaning up corporate balance sheets lies behind the slow recovery of fixed investments despite extremely low interest rates. Indeed, there are cases where financial institutions have been obliged to be cautious in extending additional loans to firms lagging in improving their financial condition, even if they have new projects which are expected to be profitable.
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.