96-F-17. Ueda, Kazuo, "Causes of the Japanese Banking Instability in the 1990s", Sept. 1996.

The paper uses a sample of 148 banks to examine the causes of the Japanese banking crisis in the 1990s. In addition, it looks at macro-economic backgrounds for the crisis. Important findings of the paper are the following. The major cause of the Japanese bad loans problem in the 1990s has been the speculative real estate related lending of the 1980s, and the volatile assets price movements that were mainly the result of monetary policy.

In addition, the unfortunate combination of financial liberalization and the regulators' segmentation approach to the banking sector has aggravated the extent of speculation. The increasing absence of monitors of bank behavior under the Japanese safety net system may have played a role as well.