Prepared by W. Raphael Lam (APD).
The three-pronged strategies Abenomics include flexible fiscal policy, aggressive monetary easing, and structural reforms to exit deflation and raise growth.
Since then, consolidations in the financial sector gave rise to a concentrated market with a few megabanks in the form of financial groups, securities firms, and life insurers.
Estimates suggest that business capital expenditures for fixed investment only account for less than 30 percent of total credit demand. External financing through capital increases has been negative (on average about ¥5 trillion per year) for the past decade due to weak equity markets. Bank lending has somewhat picked up recently, reflecting reconstruction and housing loans demand.
Including the exchange rate as an explanatory variable controls only partly for valuation changes in the BIS data. Strictly speaking, the exchange rate to be included should reflect the composition of foreign claims of origination countries/regions. By using the real effective exchange rate based on external trade weights as a proxy would imply an assumption that those weights are identical to those of foreign claims composition.
They have been among the top 25 mandated arrangers and bookrunners over the past few years. Mitsubishi UFJ Financial Group, which includes Bank of Tokyo-Mitsubishi UFJ (BTMU), was the top-ranked global mandated arranger of project finance deals in the first nine months of 2012, with Sumitomo Mitsui Financial Group and Mizuho Financial Group in the third and fourth places, respectively.
For instance, Mizuho Financial Group has about 25 percent of net business income are derived from overseas customers, with return on assets for overseas loans at about 3.3 percent in FY2012.
According to the BoJ, default rates on selected overseas loans ranged from 0.4–1.3 percent, much lower than the respective loan margins (FSR Chart III 3-11). Banks are relatively cautious in choosing overseas loan extension and setting loan conditions.