Japanese banks in the 21st century

Abstract

Since the collapse of Japan's so called "bubble economy" in the early 1990s, Japanese banks have struggled to recover their former strength, facing an unprecedented amount of bad debts. Although major banks seem to have passed a toughest period in terms of bad debts, the new environment requires them to fight in more competitive markets, where foreign financial institutions and other new entrants are active. Recent announcements of large mergers show that Japanese banking industry is now in the middle of restructuring in order to survive in the face of tougher competition and to develop sustainable competitiveness. Their style in managing business is also changing by adopting U.S. model. This thesis studies the changing environment, which includes the change of economy, society, regulations, human resource etc. It examines the restructuring of banking industry in Japan, taking examples such as Mizuho Financial Group. Finally, I try to propose a direction which they should take toward the 21st century.