The Financial System Report of Bank of Japan: a focus on banks and insurance
In this October 2017 issue of the Report, regarding the potential vulnerabilities of the financial system, structural factors underlying financial institutions' low profitability and intensified competition as well as their impact are analyzed with particular focus, in addition to a regular assessment of financial institutions' risk profile and financial bases and macro stress testing assuming a tail event. More specifically, through an international comparison of financial institutions' profits and business resources, the Report (1) shows that Japanese financial institutions have little non-interest income and depend on net interest income as a profit source; and (2) examines the possibility that the number of employees and branches is excessive relative to demand. Furthermore, we review how, through competition among financial institutions, a nationwide and persistent decline in population and the number of firms will affect the relationship between firms and financial institutions, and the systemic risk.
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- Published on 11/08/2017
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Updated on: 06/12/2018 10:29