As a result, there is a clear trend towards an overall smaller and less leveraged banking industry. While there are several benefits to this process5, it also presents an important question, which is how we can have more credit for productive firms, but less leveraged banks. The medium-term solution is for both banks and capital markets to adapt to the new environment.
References Fujiki, Hiroshi, Naohisa Hirakata and Etsuro Shioji, “Aging and Household Stockholdings: Evidence from Japanese Household Survey Data,” paper presented in this conference. Katagiri, Mitsuru, “Economic Consequences of Population Aging in Japan: Effects through Changes in Demand Structure,” Discussion Paper Series 2012-E-3, Bank of Japan, Institute for Monetary and Economic Studies, 2012.