Financial Crises in Japan during the 20 th Century

for the highly supportive environment I found during my stay in Frankfurt as Visiting Professor. Needless to mention, the paper is my responsibility, including any potential errors. Any truthful insight that may be found I attribute to the Lord who is my Light (Ps 27:1). 2 1. Introduction I have two aims with this paper. Firstly, I would like to extract lessons for theory and policy from Japan's experience with banking crises. As such, this paper falls into the body of research on banking crises, recent works within which include Caprio and to gain insights into the link between the banking sector and the economy (which are again of importance for both theory and policy). This is an important topic that has slowly but steadily grown to a substantial body of literature. Many authors recognise that banks are 'special' in some way However, the precise details of just what makes banks special, as well as the precise nature of their link to the economy have remained unclear or at least disputed. Analysing crises may help elucidate these issues.