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The Operating and Balance Sheet Performance of Japanese International Banks in Relation to Safety Levels: A Comparison with Western European Banks (Evans J. P., Simpson J. L., Mahate A. A.)

Ratings Stability&Soundness Structure of Assets&Liabilities

Abstract Using a simultaneous equation model initially developed by Shrieves and Dahl (1992) this paper shows that Japanese banks have focused on factors other than those that impact on bank safety levels. This has left Japanese banks in a vulnerable position with respect to levels of non-performing loans and indicates that less attention has been paid to prudent credit risk assessment and management practices. Recent empirical work suggests that Japanese banks are in crisis in terms of their dangerous large burden of non-performing loans. The broad objective of this study is to demonstrate that the attention of any healthy and safe banking system needs to be focused on operating and balance sheet fundamentals. Focus needs to be on maximization of earnings, determination of the appropriate level of financial risk, careful management of expenses and the optimisation of bank size in a deregulated, competitive environment where prudent lending criteria are applied without compromise.
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Libref/ Evans J. P., Simpson J. L., Mahate A. A. (2003) "The Operating and Balance Sheet Performance of Japanese International Banks in Relation to Safety Levels: A Comparison with Western European Banks", EFMA 2003 Helsinki Meetings, pp. 1 - 22
© Программирование — Александр Красильников, 2008
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