One of the problems during the Japanese bubble years of the 1990s was that banks were not especially competent at pricing risk on a stand-alone basis. Often Japanese banks would look at other banks lending to a company, and base their lending decision on that. Comforted by the presence of a branded lender, they would extend their own loans. Or, they would make a decision on the trustworthiness of the CEO, and base the lending decision on that.
The importance of focusing on loans and projects on a stand-alone basis has since been learnt by major banks, but itÆs still an unpopular concept. ôThere is a culture in Japan that expects cheap money. But...
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