The LTCB Collapse: A Case Study

Abstract

What effect did the change in the economic environment surrounding the Japanese financial and monitoring system actually have on the economic performance of Japanese banks? As we said in chapter 1, in the 1980s, Japan’s financial system — and, in particular, its banking system — was the world’s largest. Nine of the world’s top ten banks in terms of total loan assets were Japanese, including the Long-Term Credit Bank of Japan, Limited (LTCB). In contrast, its ‘bank-led’ financial system slipped into a deep slump in the 1990s from which it has yet to recover at the time of writing. The LTCB collapsed in October 1998.