Japanese banks growing less resistant to financial crises

Weak loan demand is acting like slow poison on the solvency of Japanese banks, making them more vulnerable to a Lehman Brothers-style shock over time.

The Bank of Japan found that domestic lenders would be able to withstand a financial crisis – but that capital ratios would drop lower if the blow landed five years in the future than they would today.

If a financial calamity occurred this year, one-third of regional banks – about 38 – would see their capital adequacy ratios fall below 6%. But

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