ABSTRACT
As a result of a prolonged weak economy and the declining asset prices in the 1990s, the Japanese financial sector faced an enormous bad loan problem. When a few financial institutions failed in 1996, Deposit Insurance Law was amended to allow the Deposit Insurance Corporation (DIC) to fully protect all deposits until March 2001. In spite of the full protection of all the deposits beyond the limit of normal coverage, public concern over the soundness of the financial system became extremely intense after the successive failures of Sanyo Securities, Hokkaido Takushoku Bank and Yamaichi Securities in late 1997.
