Policies for dealing with the deteriorating balance sheets of financial institutions caused by ample nonperforming loans were very slow; this was partly because there was hope for a reversal of the real estate and stock price decline, which would remove the possibility of a financial crisis or stagnation of the economy.
Even at a later stage, when experts finally agreed on the need to provide public support for financial institutions, measures to inject public funds into those institutions met with public opposition (Shirakawa 2012).10 At the same time, the drag on aggregate demand was severe owing to the balance sheet problems of firms and three types of excesses – employment, investment, and debt.